What does PIIGS mean?
PIIGS is a derisive acronym for Portugal, Italy, Ireland, Greece and Spain, which were among the euro zone’s weakest economies during the European debt crisis.
At the time, the five countries with this acronym gained attention due to weak economic output and financial instability. This raised questions about countries’ ability to repay their bondholders and raised fears that these countries could default on their debts.
Important points
PIIGS is a derogatory nickname for Portugal, Italy, Ireland, Greece, and Spain that began to be used in the late 1970s to emphasize these countries’ economic influence on the EU. Use of this term is largely obsolete. Portugal, Italy, Ireland, Greece and Spain contributed to the region’s slower GDP growth, high unemployment and high debt levels, slowing the euro area’s economic recovery after the 2008 financial crisis. It is accused of being.
Understand PIIGS
During the 2008 US financial crisis, the euro area consisted of 16 member states and adopted the use of a single currency, the euro. In the early 2000s, these countries had access to capital at very low interest rates, driven primarily by extremely accommodative monetary policies.
This has inevitably led some economically weak countries to borrow aggressively, often to levels that cannot reasonably be expected to be repaid in the event of a financial shock. The 2008 global financial crisis was a result of this negative shock, which caused the economy to stagnate and become unable to repay the loans it had procured. Additionally, access to additional funding sources has also dried up.
Because these countries used the euro as their currency, they were unable to develop their own monetary policies to combat the global economic downturn caused by the 2008 financial crisis.
To reduce speculation that the EU would abandon economically disadvantaged countries, European leaders approved a €750 billion stabilization package in 2010 to support PIIGS economies.
The PIIGS acronym is now considered derisive and is rarely used.
Criticism of the PIIGS acronym
Use of the acronym “PIGS” and similar terms dates back to the late 1970s. Its first recorded use was in 1978, when it was used to identify European underperforming countries such as Portugal, Italy, Greece, and Spain (PIGS). Ireland did not ‘join’ the group until 2008, when the global financial crisis unfolded and the economy sank into unmanageable levels of debt.
Some argue that the term highlights a return to colonial dynamics in the eurozone. It combines stereotypes about the cultural characteristics of the Portuguese, Italian, Irish, Greek and Spanish peoples. Use of this term can reinforce the perception that those people are lazy, unproductive, corrupt, and/or wasteful. The roots of these stereotypes go back to the anti-Irish and anti-Mediterranean racism of the British and Ottoman empires.
Current status of the euro area economy
The economic crises in Portugal, Italy, Ireland, Greece and Spain have reignited the debate over the effectiveness of the single currency adopted by euro area countries, with the European Union considering the individual needs of each country. It cast doubt on the idea that a currency could be maintained. respective member states.
Critics say continued economic inequality could lead to a breakup of the eurozone. In response, EU leaders proposed introducing a peer review system for approving national spending budgets to promote closer economic integration among EU member states.
On June 23, 2016, the United Kingdom voted to leave the European Union (Brexit), but many people believe that the EU has become increasingly unpopular on issues such as immigration, sovereignty, and continued support for member economies suffering from prolonged recession. The following are the results. This increased the tax burden and caused the euro to weaken.
Although there are still political risks associated with the euro brought to the fore by Brexit, the debt problems of countries on Europe’s periphery have been easing in recent years. Reports in 2018 pointed to an improvement in investor sentiment towards Greece, as evidenced by the return to the Greek bond market in July 2017 and increased demand for Spain’s long-term government bonds.
What does PIIGS stand for?
The derisive acronym “PIIGS” stands for five countries on the periphery of the eurozone economy: Portugal, Ireland, Italy, Greece and Spain.
How did the Eurozone free PIIGS countries from debt?
During the European debt crisis, the European Union twice provided bailouts to the Greek economy to prevent it from defaulting. Greece accepted the first bailout, but Greek voters ultimately rejected the second, citing necessary austerity measures. The European Central Bank also issued a $750 million euro rescue package, which was used to support purchases of Greek government bonds on the secondary market. Ireland, Portugal and Cyprus also received relief.
Which EU countries supported the PIIGS relief?
As the core industrial economies of the European Union, the leaders of France and Germany played a key role in providing debt relief for neighboring countries and restoring confidence in international credit markets. Additionally, the European Central Bank also provided significant relief.
conclusion
PIIGS refers to a number of countries on the periphery of the euro area economy. In the aftermath of the 2008 recession, countries such as Portugal, Spain, Greece, Ireland and Italy had high levels of debt, threatening to trigger a new financial crisis. The crisis has since been averted, but the acronym is now considered derisive and has fallen out of use.
