The eurozone economy remains stagnant, primarily due to Germany's weakness. The only relatively positive figures come from the south of the EU: Portugal, Spain, and Greece.
Just a few years ago, Portugal, Italy, Spain, and especially Greece were the problematic countries in the European Union (EU) and the eurozone. However, Spanish Prime Minister Pedro Sánchez recently declared at the World Economic Forum (WEF) in Davos: "We in the south can also provide solutions to shared problems."
He spoke of the ability to produce and export more clean energy - in Spain it is mainly solar energy - in the energy crisis following the Russian invasion of Ukraine. According to Sánchez, Spain should thus become the "best economy in the world."
However, from a pan-European perspective, the situation does not look promising: the eurozone economy is stagnant. The combined gross domestic product (GDP) of the last quarter of 2024 remained at the level of the previous quarter, according to Eurostat, the EU's statistical authority, at the end of January. In the second quarter, growth had been recorded at 0.4%.
Many experts agree that the main reason is the persistent weakness of the largest European economy. In Germany, GDP contracted by 0.2% in the fourth quarter and for the whole of 2024. "Germany is falling further and further behind," said Alexander Krüger, chief economist of Hauck Aufhäuser Lampe Privatbank, to the news agency Reuters.
The eurozone's largest economy is weakening and the once problematic countries are taking off: could the southern countries take on the role of locomotive in the future? Economist Gabriel Felbermayr does not believe so. The director of the Austrian Institute of Economic Research (WIFO) told DW: "No, they can't, they're simply too small economically to do so."
According to Felbermayr, Germany and France "already account for more than 50% of the eurozone's GDP. And this industrialized bloc in the north must include countries like Austria, Slovenia, Slovakia, and the Netherlands." And they are not the only ones affected: "EU countries that are not part of the euro, especially the Czech Republic and in some cases Poland, are also suffering from the weakness of the EU's industrial core."
What makes the "southern countries" so strong at the moment? For economist Hans-Werner Sinn, former director of the Ifo Institute in Munich, it is due to both external factors and political decisions: "In recent years, Germany has suffered greatly from the energy crisis, caused by a combination of the war (in Ukraine) and a self-inflicted energy shortage."
In particular, he criticizes the alleged abandonment of fossil fuels in favor of green energy sources. With this, "the EU and Germany have lost their sense of proportion. As a result of these interventions, our country now has the highest electricity prices in the world."
Gabriel Felbermayr has a similar opinion. Tourism and agriculture play a more important role in the southern countries, where "industry accounts for a significantly smaller proportion of global economic value creation. Higher energy prices across Europe, trade wars, decarbonization challenges... all of this simply affects the south less than the north."
They also have a "self-generated" advantage: since 2010, southern countries have had lower inflation rates than those in the north. "That has benefited their competitiveness. Therefore, the reform efforts following the euro debt crisis have borne fruit. That can be said of Greece, Spain, and Portugal."
Despite everything, the EU Commission forecasts a slight economic recovery in the eurozone and growth of 1.3% in 2025. The European Central Bank, which according to experts is about to lower interest rates, is likely to take further downward measures throughout the year.