ATHENS – Under Prime Minister Kyriakos Mitsotakis’ pro-business agenda, Greece is accelerating a recovery, outpacing even Germany – on which it had relied for backing international bailouts during an economic crisis.
The bad old days were from 2010-18 when successive governments of different political stripes had to get 326 billion euros ($346.47 billion) in three rescue packages to prop up an economy battered by overspending and patronage.
Five years after those ended, and with Mitsotakis in 2019 routing the former ruling anti-business Radical Left SYRIZA to take power, he has steered Greece toward prosperity and luring foreign investors.
In a review, The New York Times noted how Mitsotakis’ direction has brought boom times, especially in construction, with buildings popping up everywhere, including on islands, and investors coming back.
Greece got investment grade status from two ratings agencies in a boost but had already seen businesses eager to cash in on its new cachet as a hot country to make profits, Mitsotakis attracting high-tech giants and big business.
There are even high-rises being built in the capital Athens, constructed by Greek and international companies for tourist rentals, foreign real estate investments and company offices, the report noted.
Paris Skouros told the paper that his elevator company almost fell to the bottom floor during the economic crisis that saw harsh austerity measures attached that whacked workers, pensioners and the poor and small business.
Now, he said, it’s moving toward the top floor again.
“During the crisis, we just wanted to survive,” he said as the sound of hammers hitting sheet metal rang out in his workshop. “Now we’re profitable, and business is so strong that we can’t find enough workers to keep up with demand.”
Greece lost 25 percent of its Gross Domestic Product (GDP) during the crisis but with Mitsotakis at the helm the economy grew 5.9 percent in 2022 when he ended pandemic restrictions to attract tourists.
It worked and Greece in 2023 is on a path for a record tourism year that could see more than 31 million arrivals – three times the country’s population – spend more than 21 billion euros ($22.36 billion) as the biggest revenue engine.
Under the then-rule of SYRIZA, Greece also faced the prospect of being pushed out of the Eurozone of the 20 countries that use the euro among the 27 member states of the European Union.
Times were bleak and the debt was unsustainable but now Greece is one of Europe’s fastest-growing economies and it seems everyone suddenly wants to jump in and cash in.
The economy is growing at twice the eurozone average, and unemployment, while still high at 11 percent, is the lowest in over a decade, the report said, noting that multinational companies want a Greek address now.
IN THE CATBIRD SEAT
Banks brought to the brink of collapse with bad loans are riding high again, selling them off to vulture companies and thriving and riding the wave of recovery with big profits.
There are some difficulties, such as inflation and the high cost of food taxed at 24 percent, but Mitsotakis’ government that was easily re-elected this June twice raised the minimum wage and pensions for the first time since the crisis.
“I will never allow us to relive the trauma of a national bankruptcy,” he said a day after the latest upgrade that nearly completed a stunning turnaround from Greece being the EU’s problem child that needed support.
“We would have liked the austerity to be milder, but the measures were the Greek contribution to saving itself,” Yannis Stournaras, a former finance minister for New Democracy and the Bank of Greece Governor said.
Investors are lining up to find places in Greece and benefit, including Microsoft, which is building a 1-billion euro ($1.06 billion) data center and pharmaceutical giant Pfizer, the nucleus of a 650-million euro ($692.2 million) research center.
Others include Cisco, JPMorgan, Meta and other multinationals whose impact over the next few years is seen in the billions of euros and a magnet for other international companies who want to take a bet on the recovery continuing.
Not even a record heat wave nor deadly wildfires and floods has slowed the rebound but there are memories of what austerity wrought and the impact that lingers and hasn’t been erased.
“The austerity imposed on Greece was too strict,” said Dmitris Mitrofinakis, 67, who lives in a modest apartment with his wife in a working-class neighborhood, adding that he has little money left at the end of the month, his pension halved.
He sees signs that the economy is improving. “When you look around, people have more work and higher salaries,” he said. “But a lot of other people haven’t recovered,” he said, many of his retired neighbors struggling.
Roula Skouros, a hotel manager in the city of Tripoli, said she doesn’t expect Greece’s investment grade rating to improve her life. “Someone who maybe works at the bank or at the stock market probably is affected, but I’m not.”
An improved economy “doesn’t mean anything if you can’t afford gas and food,” she said, Mitsotakis backing away from a pledge to consider lowering the 24 percent Value Added Tax (VAT) on food because he said Greece can’t afford it.
“We’re not hiding behind investment grade, saying, ‘We achieved an important goal – let’s turn to autopilot,” he said, announcing that public sector salaries will increase for the first time since being cut 20 percent under austerity.
Konstantinos Kanderakis, 62, a supervisor at Greece’s digital services agency, earns 1300 euros ($1384) monthly and will get a 100-euro ($106.49) increase 10 years after his salary was slashed.
“It’s a big psychological boost,” he said. “Greece is stable again, and what I am happy about is that things will be better for my children,” he said.