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Given the failure of the Franco-German axis, Spain and Portugal were responsible for 50% of the growth of the eurozone in the last quarter. But JP Morgan considers that this dynamic is not sustainable: if Germany and France do not begin to contribute, Europe will approach recession.
Probably never before the Iberian Peninsula was so important to keep the euro economy functioning.
Among themselves, the two Iberian economies represent only 13% of GDP of the eurozone, but Portugal and Spain were responsible for 50% of all growth of the euro in the last quarter.
In addition, he points out the Spanish newspaper in an analysis published this Wednesday, if the Iberian peninsula is excluded from the equationthe quarterly growth of the eurozone in the last quarter it would have been negative – There would have been a GDP contraction – And the annual growth would have fallen to half.
Spain alone was responsible for one third of all growth Da Ear Zone no last quarter.
However, the situation is not sustainable in the long run, warns the investment bank JP Morgan in a recent report, cited by El Economist: Spain and Portugal cannot support this “economic miracle” indefinitely.
A look at social networks and reports of the main economic analysts shows that Spain and Portugal correspond to an Iberian miracle that is the product of multiple factors (including luck)but it is nonetheless surprising, the El Economist notices.
In one published on your profile on X/Twitter, Angel Talaverachief economist at Oxford Economics, showed last week a enlightening chartwith the phrase “The case of Spain and Portugal“, Which shows the evolution of the growth of the main European economies – and the eurozone average.
“And the case of Germany …“Note a user in a comment to Talavera’s post.
Exceptional moment of the economies of southern Europe
The economies of Spain and Portugal led GDP growth In the last quarter of 2024. The two countries of the Iberian Peninsula were the fastest growing in quarterly terms: Spain registered an expansion of 0.8% and Portugal of 1.5%. In homologous terms, Spain grew 3.5% and Portugal 2.7%.
The good time of the Iberian economies prevented the Eurozone from registering a contraction of GDP during this period. Without the contribution of Spain and Portugal for quarterly growth, the economy of the eurozone would have recorded a contraction almost 0.1% – the positive contribution that the two countries made to the quarterly GDP.
On an annual base, this impulse is even clearer. The euro zone has a growth of 0.9%. Of these 0.9%, Spain and Portugal represent 0.43 percentage points: Spain contributed 0.3815 and Portugal with 0.0459 points.
In other words, the Iberian Peninsula is responsible for almost 50% of the total growth of the eurozone, although the Spanish economy represents 10.9% of the euro GDP and the just over 1.7%.
Both countries are crossing a expansion cycle of your economiescommon remarkable demographic growth, job creation and enjoying the new consumer preferences worldwide, which favor mass -produced services by both Spain and Portugal.
Proof of this is the unemployment rate, that in both economies a clear decreasing tendencydespite the growth of the population – especially foreign.
This means that Iberian Peninsula is growing sufficientlysuch as the search for the goods and services they produce, to absorb a large number of workers.
In the case of Portugal, the unemployment rate is 6.4%while in Spain it is 10.61%, a rate that, at first glance, seems high, but which, for Spanish standards, It is “dangerously” low – It is far below the non -inflationary unemployment rate).
Thus the two countries in southern Europe, Once the big problem of the eurohave become now the horses that pull a very heavy cartloaded by the “giants” decline in Germany, France and Italy.
The recovery of these giants is essential so that the euro economy can grow sustainably and diversecontrary to what currently happens, the El Economist points out: growth is highly concentrated in two countries that represent only 13% of the economy from the euro area.
JP Morgan also echoes this anomalyespecially in the case of Spain (by its size, more relevant to the aggregate GDP of the eurozone): the growth of a single country contribute so significantly to the euro GDP.
According to the Investment Bank, this anomaly Raise concerns About what may happen in the future if Spain starts to lose strength.
“Spain alone cannot do muchgiven its dimension in the eurozone. And there are significant risk of falling if key countries-Germany, France-have a even worse than we have already anticipated In our predictions, with the possible impact of Trump’s second term as a relevant concern, ”says JP Morgan.
Reasons for the miracle
Much has been said about the reasons for this remarkable growth in Spain and Portugal. Both economies are services orientedthat’s why less exposed to the current weakness of the transforming industry no I stay from the euro area.
In addition, both countries have Large tourism sectors and were important beneficiaries of Postpandey Recovery of Travel international.
In addition, the net migratory flows also increasedin both countries, feeding a strong demographic growth.
Lastly, the Common Iberian Energy Marketwith its great quota of renewable energy and Small dependence on Russian gasattenuated the increase in energy costs. The so -called Iberian exception also helped during the peak of the energy crisis.
There is slight differences between the two countries: Increased consumption and investment have been the Motors in Portugalwhile Spain has depended more on public expense and net exports.
The big question that now puts itself It is knowing if the dynamics that these factors have so far allowed to maintain – and it seems yes.
“We hope that 2025 will be another strong year for the Spanish and Portuguese economies, consolidating the position of the Iberian Peninsula as a clear leader in an economy of the eurozone in difficulty, ”he predicts Ricardo Amaroeconomist at Oxford Economics, in a recent report on the strong performance of both countries.
The strong growth of revenues and the expected recovery in the application of PRR, the EU recovery and resilience mechanism, further reinforces optimism compared to 2025 and the following years, says Amaro.
Oxford Economics estimates that the available yield of Spanish families increased by 5% in 2024, in real terms for the second consecutive year. THE income growth was even stronger in Portugal: 7%stresses the British Study Office.
“The existence of a LARGE SOUPAN RESERVATIONThe improvement of confidence and the descent of interest rates will support consumers’ prospects on both sides of the Iberian Peninsula, ”concludes Amaro.
The fact that modest global growth limits export perspectives, adds the economist, means that consumer expenses and investment will continue to be the main engines of growth In Portugal, while Spanish growth will also focus more on the domestic market.
Another point where Oxford Economics optimism is based is that Spain and Portugal have Reduced some macrofinance vulnerabilities longtime over the last decade.
Os Large deficits of the transaction balance Currents that were typical in the 2000s have now become surplus, Amaro notes. “Not only boom of tourism exports, but other exports also which showed a remarkable dynamism during this period, including some higher value -added services, such as information and technology, and technical activities. ”
The numbers corroborate this trajectory: the recent surplus of the current balance reduced liquid external debts Of both countries to about 50% of GDP in the third quarter of 2024, about half of the value of a decade ago.
Spain and Portugal are expected to continue to grow above the average of the euro area in the coming years. A published in September, Axa IM considered it to be “Spain likely to continue to record star results in 2025”.
However, the investment group report points out, it seems unlikely that the Iberians can maintain such high growth rates for a long period of time.
What does this mean? If Germany, France or Italy do not start contributing to the Eurozone GDP, a recession is just a matter of time.
