In its latest note that focuses on southern Europe, Goldman Sachs highlights Greece, Spain, and Portugal are outpacing other Eurozone members in economic growth in the post-COVID era.
The American multinational investment bank contrasts the performance of the three countries vis-à-vis the rest of the Eurozone area in the decade before the pandemic, estimating steady expansion in consumer spending coupled with resilience in investments will continue based on a rise in disposable income compared to the average in other Eurozone members.
The relatively lower exposure of Southern European economies to U.S. tariffs and Chinese industrial competition has contributed to a more resilient manufacturing sector—Portugal being the exception. Moreover, the lion’s share of the remaining funds from the European Recovery Fund is expected to continue supporting capital expenditures in Spain, Portugal, and Greece. This comes as fiscal policy remains cautious and debt-to-GDP ratios are on a declining trajectory.
According to Goldman Sachs, tourism services have been the primary drivers for the post-pandemic economic recovery. The note underlines that while the surge in tourism has buttressed economic growth, the revival of the services sector has expanded beyond traditional areas. High-value services, such as real estate and financial activities, have seen growth nearly double that of travel and hospitality services.
Since 2022, economic activity in the three countries has gained momentum, with their average growth rate exceeding that of the Eurozone by approximately two percentage points. Private consumption in these economies has exceeded that of the Eurozone by 2% to 7%.
Employment levels have reached all-time highs in Spain and Portugal, with employment rates hitting their highest in 30 years across Spain, Portugal, and Greece.
Goldman Sachs also projects that GDP growth in Spain will decelerate from 3% in 2024 to a still robust 2% in 2025, indicating sustained economic strength despite a slower pace.
