Europe’s least developed countries have become leaders.

Something unusual is happening in the European economy. The southern countries, which nearly collapsed the euro zone in the 2012 financial crisis, are growing faster than Germany and other large economies that have long served as the region’s growth engines.

This dynamic strengthens the region’s economic health and prevents eurozone overreach. Fortunes have reversed, and the laggards have become leaders. Greece, Spain and Portugal grew more than twice as fast as the euro area average in 2023. Italy was not far behind.

Just over a decade ago, southern Europe was at the center of the eurozone debt crisis, which threatened to split the bloc of countries that use the euro. It took years to recover from a deep domestic recession and a multibillion-dollar international bailout with harsh austerity programs. Since then, those same countries have worked to rebuild their finances, attract investors, revive growth and exports, and reverse record unemployment rates.

Currently, Germany, Europe’s largest economy, is almost single-handedly dragging down the region’s fate. It is struggling to emerge from the recession caused by soaring energy prices after Russia’s invasion of Ukraine.

That was clear on Tuesday new data Economic output in the euro currency area rose by 0.3% in the first quarter of this year compared to the previous quarter, according to the European Union’s statistics agency Eurostat. The eurozone economy shrank by 0.1% in both the third and fourth quarters of last year, entering a technical recession.

Germany, which accounts for a quarter of the region’s economy, narrowly avoided recession in the first quarter of 2024, growing by 0.2%. Spain and Portugal are expanding more than three times as fast as her. Europe’s economy continues to grow at two speeds.

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