Peripheral Europe was a “story of winners and losers” in the second quarter, with Ireland recording significant improvement in terms of economic stability, says BlackRock.
BlackRock's Q2 Sovereign Risk Update shows Ireland to now be the highest-ranked eurozone peripheral economy on the BlackRock Sovereign Risk Index (BSRI), with this attributed to the country’s fiscal reform process.
According to the report, a reduction in Ireland’s projected budget deficit has caused an increase in the country’s perceived stability as an investment destination.
Conversely, increasing concern over a Greek exit from the eurozone and the government’s unwillingness to implement reform has caused the country to slip to last place on the BSRI.
“The Greek government’s backtracking on reforms has led to a deterioration in its fiscal position,” said BlackRock.
“The country’s projected budget deficit (12 months forward) has widened to 1.7 per cent of GDP from 0.9 per cent of GDP a quarter ago, consensus estimates show.”
The rest of peripheral Europe is also “treading water”, the report found.
“Italy, Spain and Portugal’s BSRI scores hardly budged in the second quarter – and have improved only modestly from the levels of four years ago,” said BlackRock.
The BSRI looks at a country’s fiscal space, willingness to pay, external finance position and financial sector health to determine its ranking.