Tags: Iceland | Ireland | Southern Europe | Euromoney

Euromoney: Iceland and Ireland Are On the Mend, While Southern Europe Sinks Deeper

By    |   Thursday, 01 Aug 2013 07:03 AM

Ireland and Iceland are back from the brink of economic calamity, while the biggest basket cases of southern Europe – Portugal, Italy and Spain – are headed deeper into an economic abyss, according to Euromoney’s Country Risk Survey.

The Euromoney survey found Ireland has attained the equivalent of a credit rating of BB+ to A- as the cost of insuring its debt against default fell during 2012.

Ireland rose to a global rank of 42 and Iceland rose to a global rank 43 in the international financial risk study, each one place higher than in the previous annual study.

Editor's Note: Economist Warns: 50% Unemployment, 100% Inflation Possible

The two nations’ improvements “mark a split with the deteriorating economic fundamentals in the southern Eurozone periphery,” Euromoney reported.

“In stark comparison to Iceland and Ireland, Spain has plunged 15 places to 57 in the global rankings since June 2012, while Italy has slipped 12 places in the same period. Portugal’s global rank of 64, meanwhile, is among the lowest in the eurozone – suggesting no end in sight for the beleaguered economy.”

Ireland’s bank stability and government finance both appear are on the mend, and its unemployment rate has declined from 15 percent to just below 14 percent.

“The banks still have a problem with the legacy loans associated with the construction sector, which is putting a massive constraint on the banks’ ability to lend, so the mortgage problem is still the biggest problem the Irish economy faces at the current time,” said Dermot O’Leary, chief economist at Goodbody Stockbrokers in Ireland.

Meanwhile, Iceland’s economy is predicted to grow by an average of 2 percent annually from 2013-2016, a Standard & Poor’s report concluded.

“The Icelandic government is following a pro-business strategy, by putting taxation reform at the top of its agenda, so if they follow through with these policies it should contribute to more investment in the country and, therefore, sustainable growth,” said Hafsteinn Gunnar Hauksson, economist at Arion Bank in Iceland.

A July poll of economists by Reuters found that unemployment will continue to grow in the southern Eurozone, but that the end of the region’s recession may be in sight.

Reuters reported southern Europe has borne the brunt of government austerity efforts more than elsewhere in the world, but at high human costs.

The Reuters poll respondents predicted the unemployment rate in Spain and Greece would remain at about 27 percent into 2015.

However, the survey also showed Portugal and Spain should manage a return to weak growth in 2014, and that Greece may escape a six-year depression next year as well.

Editor's Note: Economist Warns: 50% Unemployment, 100% Inflation Possible

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Ireland and Iceland are back from the brink of economic calamity, while the biggest basket cases of southern Europe - Portugal, Italy and Spain - are headed deeper into an economic abyss, according to Euromoney's Country Risk Survey.
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2013-03-01
Thursday, 01 Aug 2013 07:03 AM
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