Italy is overtaking Germany this year in terms of GDP growth, and is set to overtake it again in 2024, according to OECD forecasts.
Spain is expected to grow at a rate more than twice as fast as Germany next year, and Greek GDP is expected to expand at more than three times the pace of Germany.
It is a far cry from the sovereign debt crisis that erupted a decade ago, when, at the worst moments, it looked as if debt-burdened Mediterranean countries might lead the breakup of the eurozone.
The energy crisis and weak recovery in China have been particularly painful for Germany, says Sandra Horsfield, an economist at Investec.
“Places like Germany are suffering as a result of their own industrial setup. If you have an economy that relies heavily on manufacturing, that is a weak point at this particular point.
Conversely, “periphery states have formed,” admits Holger Schmieding, chief economist at Hamburg-based Berenberg Bank.
However, Schmieding is quick to point out what he sees as German fingerprints on economic success in southern Europe.
The euro crisis has served its purpose. The countries at the bottom have reformed their supply side, are now better places for businesses and are reaping the rewards, which is exactly what the euro is.
“The euro is about instilling discipline: if you want to join the euro, you have to obey discipline, because you cannot devalue the currency. The countries of the South have swallowed the medicine and are thriving as a result.”
Reforms include facilitating the hiring and firing process. This is often unpopular at first but usually leads to an increase in employment and stronger economic dynamism, as companies feel safer taking the opportunity to hire employees and people find it easier to move their jobs.