Are we going Greek?

Data on the bailed-out economies of the eurozone

Last update: 2017/02/15. Data source: Eurostat.
Fernando Alexandre (NIPE, U.Minho) and Pedro Bação (GEMF, U.Coimbra).
The late 2009/early 2010 news about the manipulation of Greece's national accounts and the revision of the 2009 budget deficit marked the beginning of the sovereign debt crisis in the eurozone. In May 2010, the troika announced a rescue plan for Greece. Ireland followed in November 2010. In May 2011 it was time for Portugal to be bailed out. In July 2012, Spain received special assistance for its banks.

Explanations for the crisis in these eurozone countries have highlighted the imbalances that these countries accumulated, especially after the introduction of the euro. The most striking manifestations of the imbalances were the increasing levels of private and public indebtedness, and the current account deficits. All four countries have shown these signs, although not in a synchronized way.

The initial view on the apparent similarities between the bailed-out economies of the eurozone focused on whether the worst case till date would predict further problems in the rest of the Eurozone.

The performance of the four countries included in this report has been very diverse. Ireland has overcome the crisis and its GDP is now well above the pre-crisis level. Spain has avoided a full bail-out and appears to be accelerating towards full recovery. Portugal has resumed growth, but the growth rates are still relatively low - similar to the pre-crisis rates.

Greece stands out for displaying the worst performance among this group of countries. This casts doubts on its permanence in the euro area and, therefore, on the future of the euro.


Real GDP growth (year-on-year)

The Greek economy, after the collapse in 2009-2013, has stagnated. GDP in 2015 is 26% lower than in 2007. In the other countries, there are signs of recovery since the beginning of 2013. However, the recovery has proceeded at very different speeds. Ireland was the first to take off: by 2014, its GDP was already above the pre-crisis level. Spain and Portugal had similar performances until 2014, but in 2015-2016 Spain clearly outpaced Portugal. Given the recent growth rates, Portugal's GDP will probably still need several years to reach the pre-crisis level.



Real GDP variation: 2015 relative to 2007


Unemployment rate

Unemployment appears to be on a declining trend since the beginning of 2013. However, unemployment in Greece and in Spain is slowly declining from a starting point above 25%, whereas in Ireland and in Portugal it declined faster from starting points between 15% and 18%.



Employment rate

employment rate for persons of working age (15-64)

Employment rates declined significantly after 2007-2008. Among the four countries, Greece was the most affected and Portugal the least. There are signs of recovery since early 2013.



Interest rate

central government bond yields on the secondary market, gross of tax, with a residual maturity of around 10 years

The international financial crisis revealed 'who had been swimming naked' and the spreads started to climb. Greece has recorded the largest increase by far. Since mid-2012 (Mario Draghi's 'whatever it takes') the yields have been declining to below pre-crisis levels. Portugal's interest rate has been rising since the beginning of 2015. Initially, Spain and Ireland were rising along, but since mid-2015 a growing gap between the Portuguese interest rate and Spanish and Irish interest rates has opened.



Daily interest rates in the last three months



General government net lending (%GDP)

The financial crisis induced large budget deficits in 2009, surpassing 10% of GDP. The deficits have persisted since then, although there is a positive trend. Comparison with primary deficits shows that interest payments have weighed heavily on public finances.



General government primary balance (%GDP)



General government consolidated gross debt (%GDP)

Apart from Ireland, efforts to reduce public debt have not been successful so far, but the levels appear to have stabilized recently.



Private debt (%GDP)

consolidated stock of liabilities held by the sectors Non-Financial corporations and Households and Non-Profit institutions serving households

Except in Ireland, private debt is declining, although very slowly in Greece.



Real effective exchange rate (42 trading partners, 2005=100)

Since the beginning of the crisis, the real effective exchange rate of these countries had been declining (depreciating), although at different speeds. The decline was larger in Ireland and smaller in Spain. However, since 2015, the real effective exchange rate of all countries appears to be increasing.



Nominal unit labour cost index

The nominal unit labour cost has been declining since the beginning of the crisis.



Current account (%GDP)

average over the last four quarters
Note: Eurostat has reduced the span of the data reported on the current account of Greece and Ireland since we began this website. In order to report a longer time series, we joined the data made available by Eurostat in 2013 and the data currently available (which begins in 2002Q1 for Greece and Ireland).

The current account has become positive in all countries. Ireland deserves a special mention: the current account balance, amid some controversy, is now over 10% of GDP.



Net international investment position (%GDP)

Note: Eurostat has reduced the span of the data reported on the current account of Greece, Spain and Ireland since we began this website. In order to report a longer time series, we joined the data made available by Eurostat in 2013 and the data currently available (which begins in 2003Q4 for Greece and 2002Q1 for Ireland).

This indicator shows the large external indebtedness of these countries. The behaviour of the Irish net international investment position stands out, namely the very large revision of the data beginning in the first quarter of 2015.