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Things have changed now. For governments, as well as businesses and households, the hope is that the new dynamism doesn\u2019t prove to be a flash in the pan.<\/p>\n
But they must also\u00a0ensure the benefits of\u00a0stronger growth reach all corners of the economy and boost living standards. Both Portugal and Greece have a\u00a0minimum wage<\/a>\u00a0that\u2019s less than \u20ac1,000 a month, Eurostat figures\u00a0show.<\/p>\n Failure to address that could foment the type of voter discontent that\u2019s already on display in large parts of\u00a0Europe.<\/p>\n In the latest European Parliament elections, there were\u00a0gains for populist and far right parties in Germany, France and Italy \u2014\u00a0the three largest economies. If that leads to broader uncertainty about politics and policies, that\u2019s a threat to\u00a0the stability\u00a0investors\u00a0and businesses need to see in the region.<\/p>\n In Spain, the far-right VOX\u00a0added seats, while Portugal\u2019s\u00a0Chega\u00a0<\/a>also made gains after its strong showing in national elections earlier this year.<\/p>\n The economic growth across Southern Europe\u00a0is partly driven by tourism and a post-pandemic surge in\u00a0visitors, but it\u2019s not the only factor. A years long\u00a0cleanup operation<\/a>\u00a0has also put these economies\u00a0on a more solid footing.<\/p>\n \u201cThe uncertainty for Greece and the rest of the Southern countries is now gone,\u201d said\u00a0Nikos Vettas<\/a>, director general\u00a0of the Foundation for Economic and Industrial Research in Athens. \u201cThis does not mean that there is not much still to be done. The absence of uncertainty, however, is the most important factor as in the past it was driving away capital and labor.\u201d<\/p>\n Greece, for example, lost a quarter of its output during a decade-long crisis, and its debt burden soared.<\/p>\n But last year the country regained its investment grade\u00a0and its debt-to-GDP ratio fell to the lowest in more than a decade. In a sign of how directions have shifted,\u00a0France\u00a0was\u00a0downgraded<\/a>\u00a0by\u00a0S&P Global\u00a0Ratings last month.<\/p>\n Portugal\u2019s debt ratio has also been on a downward trajectory in recent years, excluding the pandemic impact, after it had ballooned to unsustainable levels.<\/p>\n Greece, for example, lost a quarter of its output during a decade-long crisis, and its debt burden soared.<\/p>\n But last year the country regained its investment grade\u00a0and its debt-to-GDP ratio fell to the lowest in more than a decade. In a sign of how directions have shifted,\u00a0France\u00a0was\u00a0downgraded<\/a>\u00a0by\u00a0S&P Global\u00a0Ratings last month.<\/p>\n Portugal\u2019s debt ratio has also been on a downward trajectory in recent years, excluding the pandemic impact, after it had ballooned to unsustainable levels.<\/p>\n \u201cWhen I arrived in Portugal there was nothing going on,\u201d said fashion designer Ana Penha e Costa, who\u00a0returned from Brazil in 2014 after working for a clothing store in Rio de Janeiro.<\/p>\n Despite the fact that Portugal was recovering from a deep recession and struggling to bring down record unemployment, she decided to set up her own online clothing business. Two years later, \u00a0Penha e Costa opened her first physical store in the center of Lisbon.<\/p>\n \u201cToday 80% of our clients are foreigners,\u201d said the 36-year-old. \u201cWe\u2019re doing very well.\u201d<\/p>\n In Greece, Moschos Olives is expanding as its current facility is at maximum capacity. It\u2019s applied to a\u00a0post-pandemic EU fund<\/a>, known as RRF, in order to turn green, installing solar panels and replacing forklifts with electric models starting this summer.<\/p>\n Fiscal positions are also still a risk, but the work over the past decade is paying off. Even as the European Central Bank scaled back\u00a0its bond-buying programs, once a huge lifeline, spreads on bonds stayed broadly in check.<\/p>\n The investor worries that dominated the bond market a decade ago have faded away.\u00a0<\/p>\n Italy remains an outlier in this story, a larger economy that\u2019s lagging behind its Southern European neighbors and which has made\u00a0less fiscal progress<\/a>.<\/p>\n \u201cFor the four \u2014 Italy, Greece, Spain, Portugal \u2014 there are certain things that are true, such as a renewed sense of financial stability and the stabilization of bond spreads,\u201d said\u00a0Valentina Meliciani<\/a>, a professor of applied economics at Luiss university in Rome. \u201cBut when it comes to economic growth, there are some differences. Italy has not been able to stabilize its debt.\u201d<\/p>\n While mass tourism and cheaper manufacturing are still a large part of Southern Europe\u2019s economies, there\u2019s also a drive to push into higher-value areas, such as biotech services.\u00a0It reflects a realization that there\u2019s no benefit to sitting still.<\/p>\n Monica Sada had been advising wealthy Latin Americans in New York for a number of years on how to invest their money with JPMorgan and Deutsche Bank. Suffering with skin problems, and frustrated with the treatments available, she returned to Spain to set up her own business.<\/p>\n The beauty company,\u00a0Unicskin<\/a>, sells skincare creams and tech devices such as an LED face mask to wealthy clients in the Middle East and elsewhere.<\/p>\n Revenue has been doubling annually, with exports making up the bulk of sales, according to the company.<\/p>\n Sada\u2019s approach to her business is a microcosm of the image\u00a0that Spain, along with Greece and Portugal, want to project.<\/p>\n \u201cThe years I worked in banking taught me discipline, and living in New York opened my mind,\u201d\u00a0Sada said. \u201cI manage my company prudently, with the goal of growing steadily and in a very profitable way.\u201d<\/p>\n<\/div>\nSubscribe to the CFO Daily newsletter to keep up with the trends, issues, and executives shaping corporate finance. Sign up<\/a> for free.<\/div>\n