Programme countries
Ireland
The Irish economy grew strongly again in 2019, supported by buoyant domestic activity. Year-end data on Exchequer returns point to a general government surplus for 2019. Favourable market access conditions enabled Ireland to maintain ample cash buffers to face upcoming redemption spikes. Irish banks showed capital and liquidity buffers well above regulatory requirements, though strengthening operational efficiency would improve their resilience. Residual Brexit uncertainties and changes to both the international tax regime and the trade environment represent the main risks for the upcoming years, and warrant fiscal prudence. The Covid-19 outbreak is expected to have a substantial economic impact, adding significant uncertainty to the Irish economic and fiscal outlook, as in other parts of Europe. Read more…
Greece
After a decade of adjustment, the economic recovery consolidated in 2019. Growth was mainly driven by consumer spending and net exports while domestic demand rose modestly. Greece reached its fiscal target for the fifth consecutive year and enhanced its market access. Improved market confidence within a benign external environment enabled Greece to prepay part of its IMF debt. Continuing on the reform path pursued under the programme will entrench Greece's economic and financial sector achievements. The Covid-19 outbreak is expected to have a substantial economic impact, adding significant uncertainty to the Greek economic and fiscal outlook, as in other parts of Europe. Read more…
Spain
On the back of structural reforms and a more balanced growth pattern, the Spanish economy again outperformed the euro area average in 2019, despite lower economic growth stemming mostly from the external sector. Domestic demand eased, and the external sector contributed marginally to growth. On the fiscal front, the general government balance improved but at a slower pace than in earlier years in the absence of a new central government budget. The Spanish Treasury maintained good market access in 2019. Spanish banks improved profitability and asset quality supported by the economy and real estate market. The Covid-19 outbreak is expected to have a substantial economic impact, adding significant uncertainty to the Spanish economic and fiscal outlook, as in other parts of Europe. Read more…
Cyprus
Cyprus's economy grew at a faster pace in 2019 than most of its euro area peers and the unemployment rate declined further. A solid fiscal performance lowered financing risks and returned public debt to a downward trajectory. Cyprus enjoyed favourable financing conditions. Capital constraints stemming from still-high NPLs and subdued profitability are limiting the banking sector's contribution to growth. Invigorated reform efforts would strengthen the country's growth path and reduce its vulnerability to the external environment. The Covid-19 outbreak is expected to have a substantial economic impact, adding significant uncertainty to the Cypriot economic and fiscal outlook, as in other parts of Europe. Read more…
Portugal
Growth moderated in 2019 but remained above the euro area pace. Investment and private consumption drove growth, while exports grew less than imports, and the trade deficit increased. The government exceeded the fiscal deficit target for 2019. Bond market liquidity remained adequate and volatility decreased. Market access conditions remained favourable and bond yields declined. The banking sector continued to recover, and NPLs are down, but contingent liabilities remain. Looking ahead, the Covid-19 outbreak is expected to have a substantial economic impact, adding significant uncertainty to the Portuguese economic and fiscal outlook, as in other parts of Europe. Read more…