For “the economic miracle of Greece» says the German press, mentioning those reforms, but also the political stability that helped us to escape from the brink of bankruptcy and to develop into protagonists of development.
«Eight years ago Greece was on the brink of bankruptcy. Today it is among the champions of growth in Europe thanks to reforms and political stability”, exclaims the German Journalism Network RND (Redaktions Netzwerk Deutschland) in an article about the impressive course of the Greek economy.
With the Greek economy constantly on the rise, the IOBE’s monthly business climate index rose to 111.1 points in July compared to 87.3 for the corresponding IFO-Index in Germany. “The climate could hardly be better,” writes RND correspondent in Athens, Gerd Heller in the article entitled “the Greek economic miracle”, adding that “euphoria prevails in Greece”.
Impressive comeback of Greece
“The comeback is all the more remarkable as Greece came close to bankruptcy several times during the debt crisis in the 2010s. Its eurozone partners and the International Monetary Fund bailed the country out of bankruptcy with nearly 289 billion euros in loans. euro. In return, Athens was forced to implement a draconian austerity program, which plunged the country into the deepest and longest recession of the post-war period: between 2010 and 2016, Greece lost a quarter of its economic power.
The country has not fully recovered to date. At €208 billion, GDP was still well below the pre-crisis level of €238 billion. The world feels it too. According to calculations by the statistical agency ELSTAT, real wages last year were only at 71% of the pre-crisis level. Since 2009, workers have lost about a third of their purchasing power,” the article notes.
The reforms
And he emphasizes that “the example of Greece shows, however, that in every crisis there are also opportunities”.
Praising the economic management of the Mitsotakis government during the last four years, the RND journalist also emphasizes that “the policies of the conservative prime minister are business-friendly, but at the same time they also have a strong social character.
Mitsotakis relieved workers by reducing income taxes and social security contributions and gradually increasing the minimum wage from 650 to 780 euros. As of 2019, the number of jobs increased from 2.2 to 2.6 million, while the unemployment rate decreased from 17.3% to 11.1%. The above progress was rewarded by the voters in the recent elections as well. […] Thus Greece, which was once considered impossible to govern, is today one of the most politically stable states in the EU.”
The return of Greece to the investment stage
According to the RND correspondent, the biggest burden on the Greek economy is the government debt: “Greece was able to reduce its debt ratio from 206.3% of GDP in 2020 to 168.3% at the end of the first quarter of 2023, also thanks to the early repayment of bailout loans. But the rate is still the highest in the EU. However, Greece’s national debt is considered sustainable because the majority is held by public creditors such as the European Stability Mechanism (ESM).
Interest rates are low and the terms of the bailout loans are extended until 2070. Mainly due to the high level of debt, the four major rating agencies recognized by the ECB, Moody’s, Standard & Poor’s, Fitch and DBRS, rate Greece as the only country in euro area below investment grade. However, this may change soon.
The Japanese rating agency R&I and the German agency Scope have already upgraded Greece to the category of debtors worth investing in in recent weeks. Financial market watchers expect two of the big four agencies to follow suit by the end of the year and give the country the coveted investment-grade stamp of approval.
As Gerd Heller explains, “something like this would not only improve the refinancing possibilities of the Greek state, but would also make it easier for Greek businesses to borrow on more favorable terms and invest more money. This is the key to the sustainable return of the former crisis country. Investments increased strongly during the Mitsotakis government, but constituting 14% of GDP, they are still far below the European average of 23%”, he concludes.
Source: iefimerida.fe
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