ING: Greece Spearheads Post-Covid Competitiveness in the Eurozone

Photo source: ING

Greece is emerging as a key player in Europe improving its post-Covid 2019 competitiveness compared to Northern European countries reflecting a significant shift the eurozone, found data released last week by ING.

Greece appears to have been the best post-pandemic performer in terms of improving competitiveness as reflected in the real effective exchange rate, compared to the euro area average.

According to the study, Southern European economies including Greece, Italy, Spain are making marked improvements in competitiveness compared Northern European nations, such as Germany, Austria, Belgium, and the Netherlands, which are grappling with escalating labor costs and sluggish productivity.

Source: ING

In the aftermath of the pandemic, Northern economies appear to be experiencing a faster deterioration in labor cost competitiveness compared to their Southern counterparts.

Indicatively, Southern Eurozone nations are seeing robust growth in export dynamics, outpacing northern nations.

At the same time, ING analysts attribute the changing narrative to structural reforms being implemented in Southern Europe and to an increase in investment activity, which has been decreasing in the countries of the North after the pandemic.

Source: ING

Indicatively, while Germany showed the second largest decrease in investment growth, Greece went from close to zero in the 2013-2019 period to above 8 percent in the 2019 – 2023 period.

Among others, the report also refers to progress made in Greece from a period of high wage growth and soaring productivity to a more balanced position within the eurozone.

ING analysts are however expressing concerns about the sustainability of Northern Europe’s growth models. While Greece takes center stage in driving competitiveness convergence, the broader eurozone needs to focus on balancing labor costs with productivity growth for sustained competitiveness on a global level, the report said.