“A decade ago, Greece was in the midst of a devastating debt crisis marked by years of austerity, hardship and turmoil. Now, officials and investors say 2024 could be the year its recovery finally completes.”
He mentions the above in his analysis Reuters about the achievements of the Greek economy, stressing in its title that it is “launching after a decade of pain”.
As Reuters points out, the Greek economy is projected to grow by almost 3% this yearapproaching the pre-crisis size in 2009 and well above the Eurozone average of 0.8%.
Borrowing costs have fallen below Italy’s, and banks bailed out during the crisis are set to be fully privatized for the first time in decades – a move some of the country’s biggest investors see as a final sign of normalcy.
“With the state’s participation out, this is a milestone,” said Wim-Hein Pals of asset manager Robeco, which recently bought stakes in Greek banks.
“The Greek economy is well positioned to benefit from further growth in the future.”
Reuters points out that “the recovery in Greece, whose debt crisis threatened to collapse the entire eurozone, is strong – at least on paper. Now the country faces a new problem: to be held back by stagnation in the same eurozone giants that once imposed severe reforms on its economy.”
After years of being cut off from international markets, Greece returned to investment-grade credit in 2023. When the state bailout fund last month sold its stake in Piraeus Bank, one of the country’s largest, the sale was oversubscribed eight times.
However, challenges remain. Falling birth rates and labor shortages threaten long-term prospects, and the spread of climate-related disasters such as fires and floods has strained public finances.
More than half of Greece’s foreign direct investment, which totaled around 7.5 billion euros ($7.98 billion) in 2022, comes from northern European countries such as France and Germany, which are struggling with weak growth . Greek exports, such as agricultural products, fuel and pharmaceuticals – two-thirds of which go to the EU – fell by almost 9% last year. Economic growth has slowed to 2% in 2023, partly as a result of its neighbors lagging behind.
“Lower growth expectations in Europe affect Greece in two main ways. Through the pressure on exports… and through the higher cost of money,” said Nikos Vettas, head of IOBE.
Inequality remains
However, for many Greeks, the economic recovery has not translated into improved living standards.
Unemployment remains above 10%, the second highest rate in the EU after Spain, and GDP per capita in purchasing power is among the lowest in the bloc, according to Eurostat data. The average monthly salary of 1,175 euros is 20% lower than 15 years ago, according to figures from the Labor Ministry.
Greece needs to develop sectors where investment is more long-term, said IOBE’s Vettas, “such as infrastructure and manufacturing”.
Source: OT.gr
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