ATHENS – During a period of economic crisis and austerity measures, Greece was on the verge of being expelled from countries that use the euro. However, with the aid of bailouts and the COVID-19 pandemic finally subsiding, the country is experiencing a rebound.
Greece’s economy is being strengthened by an increase in tourism and renewed interest from foreign investors, although this growth could be disrupted by the upcoming elections amidst a volatile political climate. In 2022, Greece’s economy grew by almost 6%.
Although growth in 2023 is expected to be lower, even with another successful year in tourism, Greece is still outperforming the largest economies in the European Union. Bloomberg News Editor-in-Chief Emeritus Matthew Winkler made this observation.
In a piece for the financial news agency, the author noted how in 2015, Greece appeared to be on the brink of a so-called “Grexit” from the Eurozone. At that time, the country’s then-premier and leader of the Radical Left SYRIZA party, Alexis Tsipras, was indecisive about accepting a third bailout and more austerity measures. He initially pledged to reject them but later implemented them.
The author went on to comment that the negative perception of Greece was an outdated concept, originally propagated by the British media, which had since acknowledged their own role in the UK’s decision to leave the European Union.
Even former Federal Reserve Chairman Alan Greenspan believed that it was only a matter of time before Greece left the Eurozone and the euro collapsed. However, this never came to fruition.
Similarly, billionaire investor George Soros predicted in an interview with Bloomberg Television that Greece was “going down the drain,” but this also did not come to pass.
Despite being called a “political and economic catastrophe” by Marcel Fratzcher, former head of policy analysis at the European Central Bank and President of the German Institute of Economic Research, Greece managed to survive.
In addition to receiving €326 billion ($354.76 billion) in three international bailouts to support an economy that had been plagued by years of overspending and patronage, Greece was also aided by bond markets. According to the author, investors have made Greek bonds their preferred sovereign debt.
Despite his optimism, Greece has not yet regained investment-grade status and experienced soaring inflation and rising prices for essentials like food and energy in 2022, as it emerged from its junk bond ratings.
However, other factors could work in Greece’s favor. These include per capita Gross Domestic Product, growth, political stability, and banks shedding bad loans. These factors will be put on hold until after the upcoming elections.
The author believes that Greece is trading at least three grades above what investors consider high-risk, high-yield debt, and will soon reclaim its investment-grade rating, last conferred by Moody’s Investors Service, S&P Global Ratings, and Fitch Ratings in 2008. Since Prime Minister Kyriakos Mitsotakis was elected in 2019, the GDP has grown 7%. This is more than the EU’s largest economy, Germany, and faster than France, Italy, Spain, and even the United States, according to data compiled by Bloomberg, which paints an even rosier picture of the recovery.
However, the recovery comes at a cost to many Greeks. Banks were permitted to sell off bad loans that people could not repay after years of pay cuts, tax hikes, slashed pensions, and high unemployment. Despite this, Greece achieved the best rating in the Bloomberg Country Risk Political Score, which measures a country’s ability and/or commitment to service its debt and/or cause turbulence in the foreign-exchange market.
According to Mitsotakis, on the back of tourism, investment, a growing film industry, and major high-tech companies landing in Greece, “We used to be the basket case of Europe. Now, we’re the second-fastest growing economy in the Eurozone.”
Although Greece’s per capita GDP and political score are still lower than those of most EU countries, the Bank of Greece Governor, Yannis Stournaras, stated that “We have corrected microeconomic balances and this is reflected in this data, but we have a lot to do on institutions” such as “delays in infrastructure.”
Greece’s cost of borrowing has fallen from 63% in 2012 and 15% in 2015 to 3.9% in the present, but it will take decades to repay the bailout loans. Additionally, Greece is still reeling from the departure of tens of thousands of its brightest and best during the economic crisis, with most saying they will never return.
Mitsotakis, who is facing a tough re-election battle against SYRIZA, believes that “Greece will be a completely different country by 2030” because “we’ve been able to deliver a high growth trajectory with fiscal discipline at the same time.” He hopes to continue unless he is soon unseated.