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The Greek Economy & its Stability Programme
Authors: G.Hardouvelis, D.Malliaropulos, P.Monokroussos, T.Anastasatos, T.Stammatiou, T.Sampaniotis
Publication: Economy & Markets, Eurobank Research, Volume 5, Issue 3, June 2010
Key points:
- A restructuring of the Greek debt, a possibility currently discounted by markets, does not seem either likely or necessary
- The EU/IMF Programme has a high chance to succeed as Pros outweigh the Cons by a significant margin
- Our baseline scenario predicts a debt-to-GDP ratio of 90% in 2020 relative to EU/IMF’s 119%; If growth gradually reaches historical norms by 2015, the ratio can decline below 72%
- The Greek economy has strong growth potential resulting from: strong productivity growth, public sector crowding in, structural reforms and institutions’ building, potential for exports growth
- There is potential for positive surprises in fiscal consolidation: significant fiscal cushion embedded in the Programme, gradual capturing of the underground economy, scope for further decline of the public debt burden from privatizations and exploitation of public property