Italy is wiping the floor with Germany this year in terms of GDP growth and is set to outpace it again in 2024, on OECD forecasts.
Spain is expected to grow more than twice as fast as Germany next year, with Greek GDP set to expand at more than three-times Germany’s pace.
It is a far cry from the sovereign debt crisis of a decade ago when, at the worst moments, it looked as though the indebted Mediterranean nations might lead a breakup of the eurozone.
Sandra Horsfield, economist at Investec, says the energy crunch and China’s weak recovery have been particularly painful for Germany.
“Places like Germany are suffering as a result of their particular industrial setup. If you have an economy that is heavily manufacturing-driven, that is a weakness at this particular point,” she says.
Conversely, Holger Schmieding, chief economist at Hamburg-based Berenberg Bank, admits: “The periphery has shaped up.”
However, Schmieding is quick to point to what he sees as German fingerprints on the economic success in southern Europe.
“The euro crisis did serve its purpose. The countries down there have reformed their supply side, they are now better places for businesses and they are reaping the rewards, which is exactly what the euro is about.
“The euro is about instilling discipline: if you want to be in the euro, you have to obey discipline, because you cannot devalue. The countries in the south have swallowed the medicine and are thriving as a result.”
Reforms include making hiring and firing easier. This is often unpopular at first but typically results in a rise in employment and stronger economic dynamism, as companies feel safer taking a chance on staff and people find it easier to move jobs.