After Greece, who’s the riskier among PIGS?

When one realizes the instability Greece’s crisis has generated within the euro area, it is difficult to conceive the consequences a similar crisis would have if it were taking place in Portugal, Spain or Italy. According to the latest forecast by the European Commission (EC), Italy’s economic growth this year (2015) will reach 0.6%, far from Portugal’s 1.6% and Spain’s 2.8%.

Italy’s public debt represented 132.1% of GDP at the end of 2014, more than Portugal’s 130.2% and Spain’s 100.4%. On unemployment however, Italy seems in better shape with a national rate at 12.4%, less than Spain’s 22.4% and Portugal’s 13.4%. Yet Italy seems the most at risk of undergoing a new recession because it seems on a downward trend while Spanish and Portuguese counterparts would be on the opposite way, analysts said.

Italy’s public debt would be growing at a faster pace than expected and Prime Minister Matteo Renzi’s apparent economic policy shift, more UK counterpart David Cameron-like in his decision to abolish home tax from 2016 and cut corporate taxes from 2017, is something Italy could no longer afford.