Most Southern European countries are taking a leaf out of Germany’s economic book. They honed their competitiveness during the worst crisis years and are now reaping the reward of higher exports. Italy is the notable exception and will remain so as long as existential crises plague its governments.
Italy’s trade position has improved in the past year. As in most of the euro zone, weak domestic demand has depressed imports. But unlike in Spain, Portugal, or even Greece, Italy’s exports have not increased. In the first half of the year, they were flat compared with the same period in 2012, while imports fell 7 per cent. In Spain and Portugal, by contrast, exports rose more rapidly than imports fell. In the euro zone as a whole, exports rose at half the pace of imports.