One of the less glamorous acronyms to emerge from the financial crisis concerned some of Europe’s most struggling economies. Finbarr Bermingham checks in to see how Portugal, Ireland, Greece and Spain are performing in trade.



One of the defining – and saddest – elements of the eurozone crisis was the loss of human capital from the peripheral economies. Young Portuguese professionals were leaving for lusophone counterparts Angola and Brazil in their droves, seeking more opportunities than their homeland could possibly offer them.

While the flow hasn’t stopped, however, it’s been more measured of late. The exports leaving Portugal over the past couple of years are much more positive. Described as ‘the surprise hero of the eurozone recovery’, Portugal was outgrowing almost every other economy in the area by the end of 2013, reporting growth of 1.6%. Much of this has been based on strong exports.

“Firms have been successful in gaining new markets,” Diego Iscaro, an analyst at IHS tells GTR. “The proportion of exports growing outside the EU has increased significantly. The main driver for that has been gaining new markets. Previously, one third of exports went to Spain and we were downbeat about Portugal’s ability to export its way out of the recession, but they’ve been doing pretty well.”

Particular cause for celebration has been the country’s traditional textiles sector, as well as more value-added industries, such as transport equipment. Trade credit is still tight, but that’s in part due to a lack of demand, coupled with a banking sector that is recovering very slowly. Private and corporate debt is quite high and many exporters are deleveraging. That said, the SME market is still starved of capital – a picture reflected across Europe.

Interestingly, the Portuguese government feels its exporters could be one of the real beneficiaries of the Transatlantic Trade and Investment Partnership (TTIP), given that it is one of the only EU economies (along with Spain and Sweden) not to have any trade agreement with the US. At an event in London in November, the Portuguese Minister for Europe Bruno Maçães said: “Portuguese businesses have a lot to gain: footwear and textiles could overnight change their scale and report a 500% increase in footwear exports to the US in one year.”

Verdict: Recovering well, but not out of the woods yet. 


Ireland has for a number of years been painted as the poster-boy for austerity – an example of how an economy can recover from prolonged malaise by cutting spending and selling off public assets. In truth, it is a reckless narrative, which ignores many of the social issues ongoing in the country, which stem directly from the budget balancing the Irish government has been forced to do.

Trade has, however, been a positive story and will continue to be such, most analysts agree. The main driver of the Irish recovery has been trade. Exports were up 2.7% on a quarterly basis in the third quarter of 2014, but 15.5% over the year.

“We know part of this exceptional growth reflects volatile factors relating to the pharmaceutical sector. Nonetheless, Ireland’s exposure to the UK is probably protecting exporters from weak euro area demand. Services exports dominated by the IT sector continue to perform well – up 12.5% in the year to Q3 2014. Given the healthy flow of foreign direct investment in the IT services sector, there is little reason not to expect services exports to perform well again in 2015,” writes Conall MacCoille, chief economist at Davy Research, an Irish firm.

Much has been made of the large amounts of foreign direct investment in Ireland, driven by the low corporation tax rate. And right enough, large tech and service companies have helped spearhead the export growth. Market-wise the recovery has been dependent on the return to growth in the UK – where the economic growth has been largely thanks to strong domestic consumption. It’s estimated that half of Irish manufacturing jobs are dependent on the UK market.

The banking sector is still sluggish though. Lending was down 8% in the year to September 2014, with SMEs in particular struggling to borrow from a much-slimmed down banking sector.

MacCoille tells GTR: “That’s an ongoing issue: aggregate lending figures are contracting all the time. The debt is being paid off, gross lending remains pretty weak. There’s not that much demand for credit, but companies in difficulty are screaming for working capital. You’re not seeing a big expansion in credit yet and you’re going to see the stock contract for some time. That’s natural when you emerge from the kind of thing we’ve been through. There may well be demand there, but it’s not in the overall lending figures.”

Verdict: Trade is performing well, but the Irish recovery is fragile.


The Greek economy just can’t seem to catch a break. In November, it finally emerged from recession, with GDP growing by 0.7% in the third quarter. It was the first positive data since 2008 and the fact that the economy outgrew that of Germany over the same period was a sub-editor’s dream. Then came the news that a snap election was looming, with the prospect of the left-wing Syriza party coming to power looking more likely. This could lead to Greece exiting its bailout programme. “Uncertainty” is almost a byword for Greece and it’s not going to change any time soon.

Greek exports haven’t taken off as they have in the other PIG nations, particularly of goods. The numbers behind the recovery have largely been driven by a huge uptick in tourism. Another dynamic area of the economy has been inward investment. Greece’s location makes it prime territory for Chinese companies looking for an entry to the European market, and its trade infrastructure has been the cornerstone of much of the investment.

The Chinese state-owned OSCO is set to take over the Piraeus Port, which it views as a potential logistical hub for inward trade to Europe. Piraeus is the largest container port in the Eastern Mediterranean and the Chinese firm has already been spending large sums of money developing it. In 2009, it signed a 35-year agreement which allowed it to run the two container terminals at the port, in return for €230mn in development capital.

Any further political upheaval could serve to drive this sort of investment away. “The potential is great. Particularly as you mentioned that Greece is in a strategic geographic location. A link between Asia and Europe. They’ve been receiving investment in ports, railways, etc. With political uncertainty, a change in direction risks reversing many of the gains that Greece achieved in recent years,” says Iscaro of IHS.

Verdict: Slight recovery driven by investment and tourism, rather than trade and exports.


In May 2013, Spain recorded its first monthly trade surplus since 1971 and while it has slipped back into deficit in the time since, the picture regarding exports is much improved. The country was expected to end 2014 with the lowest trade deficit for 40 years, with the government and most Spain-watchers confident that any economic recovery will be based on trade.

“It’s more than a report – it’s a reality,” Professor Ignacio de la Torre, an economist and partner in the investment group Arcano tells GTR. “Spanish exports as a percentage of GDP stands at 35% above that of the UK, France, Italy or the US, by far the most successful sector has been the services sector, as well as autos.”

Unfortunately for the Spanish people, this is in part due to the low labour costs. Falling wages have made Spanish exports more competitive. Today a Spaniard works for €21 for the hour, compared to €28 for workers elsewhere in the eurozone. The difference in productivity per hour worked is only 4%, so the Spaniard is more competitive than his peers around Europe.

Spain has also been successful in pursuing new markets for its exports. Before the financial crisis, the eurozone took 57% of Spanish exports. This has fallen to below 50%. From January to September of 2014, Spain’s exports to non-EU countries grew by 23% – although the ban on fresh food exports to Russia may have a detrimental effect on this welcome uptick.

Unemployment still remains abnormally high in Spain – as it does across the PIGS – and the instability this brings will always mean the economy is never far from political strife and turmoil. But Spanish exporters are renowned for being innovative. For instance, it has been one of the premier exporters of electric cars and even sells electric Nissans to Japan, the car manufacturer’s native country.

Verdict: Exports are performing strongly, but labour issues could have varying impacts.