S&P: Exports driving recovery

Standard & Poor’s predicts that Ireland, Spain and Portugal will all have current account surpluses this year as they reform their economies after the sovereign debt crisis pushed them to seek bailouts.

The forecast is part of a report on the countries’ progress in rebalancing growth published yesterday.

Since 2008, exports have risen 13.6% in Ireland, 4.4% in Spain and 4.6% in Portugal&.

“Peripheral European economies are adjusting externally with speed,” said Frank Gill, a credit analyst at S&P in London.

“With the significant exception of Greece, exports are leading this adjustment, while unit labour costs are falling back to more competitive levels.”

Data measuring countries’ re-balancing progress “are substantially higher in 2012 than in 2011, confirming an acceleration of external re-balancing amid declining unit labour costs,” S&P said.

“This is not to understate the difficulties that lie ahead. We consider high unemployment a threat to cohesion across Europe.”

While Greece’s current-account deficit also shrank, Greek imports are down 6.4% since 2008, while exports fell 1.3%&.

— Bloomberg