An Introduction to the PIIGS


PIIGS is an acronym for a group of five countries–Portugal, Italy, Greece, Spain, and Ireland. Formerly, the acronym was PIGS, but now Ireland is included. similar to others like BRICS and EAGLES, that defines a certain group of countries that have some commonality in location and economic environments. In this case, PIGS includes Portugal, Italy, Greece and Spain. While not originally included in the group, Ireland has found its way into the mix, which is why the term PIIGS is more commonly used now.

All of these countries are part of the eurozone and have been grouped together with the unflattering acronym of a barnyard animal known for its proclivity to mud, dirt and not-so- pleasant smells. The term itself is not an official title, nor does it separately delineate these countries from the European Union (EU). The term became a convenient way for currency traders and global investors to group these countries together. It has lived on as a club, of sorts, that no country would want to join and each participant would like to quit.

While primarily concerned with resolving their economic struggles, the members of the PIIGS resent the negative connotations and some have renounced the use of the term altogether. Though each member has become a staple of the media’s attention, many professional organizations have made efforts to reduce or eliminate the term itself due to its negative connotations. Their efforts are commendable; however, there is no mistaking that these countries have a history of facing economic difficulties, high unemployment and political instability. While some of their individual GDP growth rates are surprisingly impressive, most of it was financed, leaving these countries with heavy debt burdens. Consider the following information about each component of the PIIGS.


Located on the tip of Spain in Southern Europe, this country ranks as the 14th largest economy in the European Union. Hosting over 10 million people, Portugal exports over 75% of its agriculture-based products, including grain, cattle, cork wheat and olive oil. While it’s one of the smallest economies included in the original PIGS, Portugal’s economic woes include the same issues of slow economic growth, high unemployment and a high debt to GDP rating that affect its Mediterranean cousins.


The boot-shaped county in the south of Europe has had the misfortune of being included in this group, and is sometimes interchangeable with Ireland, depending on who is using the term. Because of Italy’s rich history, famous food and romantic nature, it is one of the most visited countries in the world. About two-thirds of the 60 million residents work in the service sector, which may explain part of its high unemployment. Tourism, a driving force in this country, has been negatively affected since the world economy stumbled in 2008. Italy’s economy is considered above average in development, driven by an educated, efficient, hard working labor force. Italy boasts a very high standard of living, but it has financed these standards by being one of Europe’s biggest offenders of taking on debt. The country has reached an above average GDP per capita, with a national debt in excess of 100% of GDP.


Also called the Emerald Isle, Ireland is a famous tourist destination due to its rich history, unique climate and terrain. Ireland has a population of around 4.5 million, and a small economy, which places it close to Portugal in its ranking in the European Union. Ireland was dubbed the Celtic Tiger, as it was once considered an economic anchor with Asian-like growth characteristics. Ireland participated in the economic boom throughout the 1990s and 2000s, but suffered from the same symptoms that affected many other countries, such as a housing bubble. Ireland fell as fast as it grew, and was the first eurozone country to fall rapidly into recession in 2008. In order to avoid collapse, Ireland required massive injections to its banks and significant government oversight and rebuilding efforts. While it emerged from the recession with the rest of the world, the scars are deep, leaving the country with heavy debt and very high unemployment.


The southernmost member of the EU hosts nearly 20 million tourists a year, which is almost twice the size of its actual population. Due to its rich history, romantic stories and famous beaches, it is no wonder this is a favorite destination for travelers. Greece joined the EU in 2001, and its government began building a mountain of debt that surpassed its GDP prior to the other EU countries. Greece also suffers from slow economic growth and high unemployment, but it differs in its economic structure compared to other European nations; Greece has a very large public sector workforce accounting for about half its GDP. This in itself has limited Greece, to a certain extent, in its economic recovery, as the public sector is notorious for moving and reacting slowly. Since the end of 2009 and up to 2011, Greece has been the most public, and most troubled, member of the PIIGS, seeing its fair share of corruption and political unrest.


Spain is the fifth largest economy in the EU, and, despite its place in the PIIGS, it’s the 12th largest in the world as of 2010. Famous for its historical sites and diverse climates and locations, Spain also relies heavily on tourism to drive its economy. With over 45 million residents and a large land mass, Spain is an important part of the EU, but it has seen some of the worst economic damage. Part of the reason Spain was placed in this group was its dramatic economic downfall that started in the late 2000s. Spain boasted 15 years of above average GDP growth and began to stumble in 2007 as a result of a similar property bubble that occurred in Ireland, high unemployment and a large trade deficit. With such a successful run in growth and comparatively strong banking system, it was hard to imagine Spain falling so hard and staying down so long; however, prolonged growth without assessing fundamental issues such as debt management and employment, brought this country onto the brink of crisis.

Unemployment and Debt

The unemployment data is shown below.

Image by Sabrina Jiang © Investopedia 2020

The debt data is shown below.

Image by Sabrina Jiang © Investopedia 2020

While the origin of the term PIIGS grew from the currency trading and investment community, it caught on with the public. The members are quite vocal against the use of the term, finding it to have negative connotations that do not exactly inspire confidence.

As much as the members of PIIGS criticize the term, this acronym has just become too well used and convenient and will most likely stick with them for some time. While it seems the entire EU and the rest of the world is suffering from some of these same symptoms, these five countries seem to always be on the top of the list when it comes to high debt levels compared to GDP, stagnate economic growth, unstable and sometimes corrupt governments, high unemployment and a general lack of catalysts for change, besides government or EU intervention. Each of these countries has had some previous experience with growth and economic success, but since joining the highly touted EU, they have used their collective borrowing strength to promote growth using debt instead of organically expanding their economies.

The Bottom Line

While it is hard to imagine and impossible to turn back time, it’s a wonder how the PIIGS might have fared had they gone it alone or left their currency floating and let the markets decide their fate. Unfortunately for these countries, the damage, whether caused collectively or independently, is deep and has left long lasting scars. The debt they collected to grow their economies has reached a point where it will most likely be excused, restructured or somehow revised in order for them to move forward. While the media tends to dramatize the issues of each of the PIIGS, their state of affairs could be much worse.

All of these countries have had both good times and bad, and will eventually right themselves, as are cycles that change. There is hope for the PIIGS and they may one day be on top of the economic world.

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