The National Bank of Belgium published an article assessing how Spain, Portugal and Greece have recovered from the global financial crisis and euro area sovereign debt crisis and how their performance since 2007 compares with Belgium and core euro area economies. The article concludes that the three southern European economies have recently outperformed the core on growth and public finances, with budget deficits cut sharply, Greece and Portugal moving into surplus, and government debt ratios set on a downward path. According to the article, the turnaround followed painful adjustments to large pre-crisis external and fiscal imbalances. Structural reforms aligned wage growth more closely with productivity, eased labour market rules and strengthened incentives to work longer, improving cost competitiveness and helping eliminate large current account deficits by 2013. More recently, growth has been supported by tourism, net migration in Spain and Portugal, limited dependence on energy imports and investment financed through European Union funds, notably the Recovery and Resilience Facility. Fiscal repair came through tax increases, cuts to public sector pay and capital spending, and pension and social benefit reforms, allowing all three countries to return quickly after the pandemic to favourable pre-Covid fiscal positions. The article also highlights remaining vulnerabilities and lessons for Belgium. Greece still has a large current account deficit and remains more dependent on foreign funding, while GDP per capita, productivity and, in Spain and Greece, unemployment still compare poorly with core euro area peers. For Belgium, the article argues that early action on imbalances, structural reforms to raise competitiveness and sound public finances can reduce the need for harsher adjustment later, adding that Belgium starts from stronger external and private sector balance sheet positions.
National Bank of Belgium2026-07-02
National Bank of Belgium article finds Spain Portugal and Greece reversed major pre-crisis imbalances but still face structural gaps
The National Bank of Belgium published an article saying Spain, Portugal and Greece have largely corrected the external and fiscal imbalances that drove their sovereign debt crisis, with Greece and Portugal now running budget surpluses and debt ratios falling. It attributes the improvement to structural reforms, tourism, migration and European Union investment support, while noting that Greece still depends heavily on foreign funding and that productivity and unemployment gaps remain. The article presents the experience as a lesson for Belgium on acting early, reforming and restoring public finances.