The Greek economy will continue to have a high performance and in 2025 according to estimates of international rating agencies and investment firms.
From the beginning of the new year, the markets gave a vote of confidence in the prospects of the Greek economy, with an explosive demand for the new 10-year bond. With a record demand of over 40 billion euros, exceeding the 35 billion euros for last year’s 10-year bond issue, Greece has covered 50% of this year’s loan programme, with 9 out of 10 investors coming from abroad and the vast majority of them being long-term investors.
Greece performs better than many other EU countries. While the EU average growth rate is 0.9%, the Commission forecasts growth of 2.3% for Greece in 2025 from 2.1% in 2024.
Standard & Poor’s sees Greece, Cyprus, Ireland and Portugal as Europe’s “rising stars”.In its analysis entitled “European Developed Markets Sovereign Outlook 2025: At A Crossroads”, Standard & Poor’s stresses, among other things, that the narrowing of yields between the core and peripheral economies underlines the growing importance of Southern European countries as growth engines and successful fiscal consolidation.
Moody’s, in a previous report, stressed that Greece will be the exception in a “stalled” Eurozone, an island of growth.
In fact, it projects that Greece will achieve broadly stable growth until 2033, due to a boost in potential growth of around 0.4 percentage points per year until 2030 from the Recovery and Resilience Fund.
Capital Economics sees another two years of outperformance for Greece relative to the Eurozone, with its debt falling. Greece is expected to show a 2% rate in 2025 and debt is estimated to fall to 147%. As for public finances, it sees a steady improvement, due to disciplined government spending and healthy primary surpluses.
Greece among Europe’s biggest success stories, according to HSBC
In a Europe where the “giants” have become the big weak links, the formerly weak links are doing very well, HSBC pointed out. While the continent’s largest economies face cyclical and structural weaknesses the region has made an impressive turnaround, the British bank notes, singling out the region’s major success stories, including Greece.
The major US bank JP Morgan upgraded Greece from a “neutral” recommendation to an “outperform” recommendation, as it expects higher growth than that of the Eurozone, but also because of the Greek banks’ strong balance sheets.
In fact, it is surprised by Greece’s return and estimates that in 2025, GDP will be more than 20% higher than the 2020 low in real terms.
Bank valuations look cheap and in general he thinks Greek equities in general have room for a strong rise.
The external risks
In the immediate future, the Greek economy is likely to be tested by various, mainly exogenous, risks, which are summarised by the Hellenic Fiscal Council as follows:
– Geopolitical tensions due to the wars in Ukraine and the Middle East. The geopolitical instability caused by the military conflicts in the region increases, first of all, uncertainty, which may negatively affect the various macroeconomic variables of the Greek economy.
Although the conflicts have recently been characterised by high intensity, at present the global economy does not seem to have been significantly affected.
– Stagnation or even slowdown of European economies, especially the German economy. A large part of the Greek economy’s exports of goods and services are directed to European economies, and a significant part of these are absorbed by the German economy. By extension, stagnation or worse, a recession in the German economy will negatively affect the Greek economy.
– A slowdown in the reduction of ECB interest rates. Since July 2022, in order to address inflationary pressures in the euro area, the ECB has adopted a restrictive monetary policy, although, from September 2023, thanks to the deceleration of inflation, it has been easing monetary policy by lowering key interest rates. Since then, interest rate cuts have continued, albeit at a slow pace.
– Possible tariffs from the new Trump administration. Another source of uncertainty-recession for the European economy has to do with possible tariffs imposed by the new Trump administration in the US, mainly on Europe and China. The Trump administration has imposed significant tariffs on US imports from China since 2018, which have led to a significant increase in US tariff revenues.
SOURCE; ANA-MPA
Please wait...