Greece is up. Greece is down. Greece can recover. Greece can’t recover. The 3 ½-year rollercoaster ride for the beleaguered Greek economy continues with envoys from international lenders in Athens checking the books on long-delayed reforms and squabbling with the government over the size of a looming hole in the 2014 budget: is it 2.9 billion euros or 500 million euros?
Two bailouts from the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) have failed to cut the country’s staggering debt, now at some $430 billion, even after a $134 billion write-down in 2011 when the government stiffed private investors, including those in the Diaspora, with 74 percent losses.
But not all analysts are gloomy. Greece is on the way to economic recovery as investor faith returns to the recession-ridden Eurozone nation, an executive at Greece’s largest bank has told CNN.
Petros Christodoulou, Deputy Chief Executive of the National Bank of Greece, said that a drastic drop in government borrowing costs since the outbreak of the crisis in 2009 marks a “great improvement and a great perception of the country” by foreign investors.
Speaking to CNN’s Max Foster in Athens, Christodoulou said: “Are we out of the woods with 8% yields in government debt? Not yet, but we are on the right path.” He added: “All this eventually proliferates into everything that happens in Greece, starting from the banking sector which is in the center of the economy and this is good news going forward.”
Christodoulou’s comments come in a week of highs and lows for Europe’s worst hit nation. Last week Greek stocks showed a keen renewal of interest with speculators looking to cash in on the prospects of any chance of a rebound even with the country in the sixth year of a deep recession.
Christodoulou, in a piece by CNN’s Oliver Joy, said he believes Greece is becoming a business-friendly country as banks and the state sell off assets in a bid to raise capital. “I’m not worried about all this bickering here and there between the government and the Troika. At the end of the day, we’ve come a long way and we’re now at the tail end.”
With Greek unemployment at a record 27.6 percent and some 20 percent of the people pushed into poverty by the austerity measures demanded by the Troika so that banks can be repaid – and with tax revenues off estimates – many analysts say Greece can’t recover without imposing losses on the Troika, which has nixed the idea.
Nicholas Spiro, founder of Spiro Sovereign Strategy, told CNN that investor confidence in detached from the economic reality in Greece and largely based on the country’s Eurozone status being secure. “The kind of unemployment and the kind of headwinds that Greece is facing are simply too much. It’s very difficult to see how Greece is going to stage any kind of meaningful recovery.”
Prime Minister Antonis Samaras still has to deal with social unrest which could balloon if he goes back on his word not to implement any more pay cuts, tax hikes and slashed pensions with the Troika pushing for the government to find ways to plug the fiscal gap.
A general strike earlier this month did nothing to convince the government to change its mind or strategy of relying on loans and hopes of finding investors. Christodoulou, second-in-command at Greeks largest and oldest commercial bank, said he wasn’t worried by the protests.
The European Commission released its autumn economic forecast, estimating that Greece will emerge from recession in 2014 and projected solid growth of 2.9% for 2015 if the country maintains its current path: virtually no one else besides Greece believes that.
Spiro said that Greece will be “very lucky” to grow next year. “This is a country that is still struggling to meet the terms of its bailout program,” he added, “they have been kicked into the long grass to keep the euro show on the road.”
Greece fell into recession after the collapse of U.S. bank Lehman Brothers in 2008, which sparked a euro-wide debt crisis the following year and amplified years of wild overspending in Greece by the country’s two ruling parties, Samaras’ New Democracy Conservatives and his partners, the PASOK Socialists who have turned their back on party principles for political and pragmatic reasons. Christodoulou told CNN that the next step for Greece is to reduce state intervention in business.
“In the old days, we had the Greek state directly or indirectly involved in about two-thirds of Greek business, and it’s the delight of all Greeks when we see this shrinking drastically now.”