In 2023, the European Union released economic data for the last quarter of 2023, revealing a remarkable trend in GDP growth. While Germany, France, and the U.K. have experienced stagnant growth and recessions in recent years, Southern European countries like Italy, Greece, Spain, and Portugal have managed to turn their economic situation around. This significant growth rate is unprecedented in recent European economic history and reflects a wider trend.
GDP across the entire EU saw an average growth rate of about 0.4 percent in 2023, with Greece, Spain, and Portugal posting rates well above 2 percent. Italy and Spain emerged as principal contributors to the EU’s return to modest growth due to their size and resilience. Conversely, Germany once considered Europe’s juggernaut has become the laggard in terms of economic growth. This turnaround is remarkable considering the severe recession and austerity measures Southern Europe faced in the 2010s following the 2008 financial crisis.
The overperformance of Southern Europe compared to the rest of the EU can be attributed to developments in energy and tourism sectors shaped by global events like the war in Ukraine and COVID-19 pandemic. The European energy crisis following Russia’s invasion of Ukraine in 2022 highlighted the EU’s reliance on Russian energy sources that particularly affected Germany and France. However, countries like Spain, Portugal, and Italy had diversified their energy sources over time that made them less impacted by price hikes caused by Russia’s invasion of Ukraine. Additionally, Spain has forged strong energy partnerships with North African countries like Algeria through private Spanish energy companies that reduced their dependence on Russian gas entirely.
Moreover, tourism has been another factor contributing to Southern Europe’s exceptional performance due to its attractive weather conditions during winter months that attracted tourists from other regions looking for warm getaways amidst global pandemic restrictions. It’s worth noting that while this trend may not continue endlessly it does signify a positive shift towards recovery from post-pandemic struggles.
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