Amidst the fallout of the European debt crisis 15 years ago, Spain, Greece, and Portugal were once scorned as “Club Med” nations. However, thanks to a resurgence in tourism, these countries are now flourishing economically and outshining their northern counterparts.
The harsh austerity measures imposed by the European Union partners in the early 2010s were a bitter pill to swallow for Spain, Greece, and Portugal. But the tides have turned, and the COVID-19 pandemic has ushered in a new era of growth and prosperity for these nations.
Spain saw its gross domestic product (GDP) expand by 2.5% last year, while Portugal and Greece experienced growth rates of 2.3% and 2.0%, respectively. These figures far exceed the European Union average of 0.4%, with Germany experiencing a 0.3% contraction in 2023.
The tourism sector plays a pivotal role in the economies of these three countries, making up nearly a quarter of Greece’s GDP and 12% of both Portugal and Spain’s economies. The EU’s pandemic recovery fund has also injected billions of euros into Spain, Greece, and Portugal, further fueling their economic resurgence.
Structural reforms have played a significant role in enhancing the competitiveness and attractiveness of these nations. Foreign investment, particularly in renewable energy and cloud computing, has been on the rise. Major companies like Amazon and automakers such as Volkswagen and Stellantis have invested heavily in these countries, further boosting their economies.
While the growth spurt is a positive sign, challenges still remain. Unemployment rates in Greece and Spain remain high, and deficits and debt levels are still a concern. However, with continued efforts and reforms, the convergence between southern and northern European nations is expected to continue, albeit at a slower pace. Spain, Portugal, and Greece have come a long way, but there is still work to be done to sustain their economic success.
