The Irish economy showed strong growth in 2022, with real GDP expanding by 12%, buoyed by resilient exports and domestic demand. Fiscal policy remained supportive. Outperforming fiscal revenues allowed the Irish government to achieve a surplus, despite increasing expenditure. Irish banks’ financial positions remained sound and their profitability improved over the course of the year.

Greece staged a robust economic performance in 2022, withstanding the economic fallout from the war in Ukraine. Real GDP grew 5.9%. Employment, tourism, and fiscal revenue all recorded strong gains. This created space for one of the largest fiscal support packages among euro area countries for households and firms to help them cope with high energy prices. Public debt fell precipitously, and Greece exited the European Commission’s enhanced surveillance in August, testimony to the country’s substantial economic progress in recent years.

Spain’s economy posted robust growth of 5.5% in 2022 and the labour market performed strongly. The country faced new challenges associated with the war in Ukraine despite the low direct exposure to energy market disruptions. Government policies mitigated the impact of high energy prices. The Spanish Treasury maintained favourable market access in an environment of rising interest rates. The profitability of Spanish banks improved, although it will be weakened in 2023 by the implementation of an exceptional levy on financial institutions intended to fund measures to ease the effects of the increased cost of living.

Cyprus’ economy recorded strong growth of5.6% in 2022, partially due to the smaller-than-expected negative impact of the war in Ukraine. The government budget balance moved into a surplus as pandemic-related fiscal support ended and energy-related spending remained limited. Sovereign financing conditions deteriorated throughout the year. In the banking sector, profitability improved but NPL reduction slowed. Risks to debt sustainability and repayment capacity were contained, despite a weakened macroeconomic outlook. The government’s continued reform efforts, supported by the implementation of the recovery and resilience plan, could raise the country’s growth potential and further promote financial stability.

Strong economic growth of 6.7% in Portugal was driven by private consumption and exports in 2022, despite a sharp rise in inflation and tightening financial conditions. The general government deficit narrowed, supported by a rebound in revenues and lower-than-budgeted public investment. Public debt continued declining in percentage of GDP. Market access conditions remained favourable, despite a rise in sovereign bond yields. Portuguese banks’ profitability rebounded as interest rates increased and credit quality improved.