PIGS economies

Which are the PIGS countries?

After BRIC — Brazil, Russia, India and China, financial market analysts have now clubbed troubled European economies — Portugal, Italy, Greece and Spain — together as PIGS. Each of these economies has been going through sovereign debt crises and the European Union has had to bail them out. However, unlike the BRIC nations, which have a positive connotation, this has a negative feel, and hence, many European investment banks do not prefer using this acronym, though it is popularly used in the media.

What were their individual problems?

Italy tried to pay high wages and had an under-competitive economy, hence, a budget deficit crisis followed. Corruption in the state-run businesses sector and the near-corporate failure of Alitalia also played a part in the balance of payments crisis and the economy consequently crashed. Spain's wage bill and economy went the Italy way. It had its bit of a housing bubble and bust. Portugal was hit by the desire to have high wages and the inability to manipulate national fiscal/currency policy to restart a failing economy. It soon lost its favoured status among investors to Slovenia. Greece, on the other hand, had most of the above-mentioned crisis since the Millennium and took out excessive overseas loans in the hope of restarting its national economy, especially after the slump in tourism.

How has a variation emerged?

With woes of Ireland, which could be similar in nature to that of the PIGS economies, the acronym is now extended to PIIGs to include Ireland as well. Besides the EU, even multilateral agencies like IMF have announced bailout for them.