Redemption of the Pigs: Club Med economies are now a stabilizing force

They were the risk of the Eurozone. But with Germany and the Netherlands in crisis, Italy, Greece and Spain can save Europe from recession

Once upon a time there were the Pigs and a group of hedge funds who made a big bet against them. Pigs is the acronym of Portugal, Italy, Greece and Spain to which Ireland has been added in the Piigs version, which somewhat eliminates the derogatory meaning (“pig”) that the person who coined the expression wanted to attribute to it 2011 to indicate the countries could have collapsed at any moment, dragging the Eurozone with them. Those were the times of the Greek sovereign debt crisis and international investor confidence in Italy was also at its lowest. It’s been a little over ten years but it feels like a century. Not that Pigs has suddenly become synonymous with virtue, but the investor climate must indeed have changed if one of Generali Investments’ senior economists, Martin Wolburg, asks whether it will be “the periphery that will save the eurozone from the threat of recession”. due to its lower exposure to the weakness of the global economic cycle. In the face of a European GDP that has contracted in the last two quarters, observes Wolburg, the peripheral countries have recorded growth rates much higher than the average and this also because they are less oriented towards exports to China than, for example, Germany or the Netherlands. Furthermore, these economies will benefit from the tourist season and the disbursement of the Recovery Fund will stimulate demand. “The strength of the peripheral countries is clearly a stabilizing factor”, adds the Generali economist.