At the beginning of the week, the “Financial Times” (“FT”) highlighted seven countries with comparatively strong economic growth, moderate inflation and high stock market returns. These also include two of the five countries (Portugal, Italy, Ireland, Greece, Spain) that were at the center of the debt crisis in the euro zone in 2010 and were subsumed under the abbreviation PIIGS.
The economy in Greece has stabilized since then. As in almost all countries, the CoV crisis caused the gross domestic product (GDP) to collapse in 2020. Just one year later, however, things were looking up once more: in 2021, GDP rose by 8.3 percent on average over the year, and the debt level fell from 206 to 193 percent of economic output. Which cannot hide the fact that Greece still has the highest national debt in the euro zone.
Athens repaid IMF debt early
However, the improved situation made it possible for Athens to repay its outstanding loans from the International Monetary Fund (IMF) in April this year, almost two years earlier than planned. Since August, Greece has also no longer been under the increased surveillance of the EU Commission – most of the reforms requested have been successfully implemented. Prime Minister Kyriakos Mitsotakis commented on the decision that his country was no longer “the black sheep of Europe”.
“Golden Visa” brought Portugal billions
The Portuguese economy has also developed solidly recently. In mid-September, the rating agency S&P raised the country’s long-term rating from “BBB” to “BBB+”. Despite higher energy costs and rising interest rates, Portugal has delivered strong growth, jobs and tax results, according to analysts. In addition, investments are likely to increase sharply between 2022 and 2027 due to the expected EU funding of 61.2 billion euros (26 percent of GDP). The one-party majority in the government of the socialist Antonio Costa, who was re-elected at the beginning of the year, reduces the uncertainty regarding the implementation of the fiscal and structural reforms, it said.
According to media reports, the “Golden Visa” brought Portugal a lot of money – 397.7 million euros between January and August this year alone. Since 2012, when Lisbon launched the albeit controversial program, almost 6.5 billion euros have come into the country. Citizens from third countries can acquire residence in Portugal via the “Golden Visa” if they invest in the country, for example through the purchase of real estate or government bonds, and meet certain requirements. “It is perhaps no coincidence that the Lisbon stock market is the best-performing stock market in the developed world this year,” wrote the FT.
Vietnam instead of China
The economy of Vietnam is currently proving itself under completely different circumstances. The CoV pandemic and the ongoing lockdowns in China, as well as the increasing geopolitical disagreements between the USA and Beijing – fueled by the war in Ukraine – have caused many Western companies to rethink: They rely far less on China for cheap goods production than in previous decades. Vietnam is a big beneficiary of this development.
Lego is currently building the next factory near Ho Chi Minh City for a billion US dollars. Apple is also planning to increasingly produce in Vietnam in the future. Apple’s Chinese supplier Luxshare Precision Industry and iPhone assembler Foxconn have started test production of the Apple Watch and MacBook in northern Vietnam, it said in mid-August.
India is growing and growing
Apple has relocated other areas of production to India. Due to the rigid regulations in China, many companies now prefer the second largest emerging market. “Investments in digital services and manufacturing are bearing fruit, and the huge domestic market is shielding India from a global recession,” the FT wrote. The Indian economy continues to be among the fastest growing in the world.
As a successful example, the “FT” also cites Indonesia, the fourth most populous country in the world, with the world’s largest number of Muslims. The country, which is rich in raw materials, is benefiting from the high demand, but with a domestic market of 276 million inhabitants it is not overly dependent on exports. Debt is unusually low compared to other developing countries, and the currency is unusually stable. Indonesia is thus a shining example of “economically savvy Islam”.
Surprising profiteers
In Saudi Arabia, on the other hand, reforms including easing restrictions on women, workers and travelers and opening up nightlife have helped projected growth jump to nearly 6 percent over the next two years. In addition, the Saudi regime is investing oil money in infrastructure, including ten “smart” cities that promise a futuristic and car-free version of urban life.
The FT cites Japan as the “most surprising country” for economic prosperity. After years of deflation there, they are now benefiting from inflation of just over two percent. Labor costs in Japan are now lower than in China, the cheap yen is boosting exports and reviving market sentiment.
All of these economies might, of course, falter, “whether from a change in leadership, from a change in politics, or from complacency.” After all, even in conflict-ridden times like these, there doesn’t seem to be only losers.
