Antonis Samaras tried to make a speech of confidence in the future at the grand opening Saturday of the Thessaloniki International Fair. Greek Prime Minister assured that the country would find an annual GDP growth in the third quarter 2014 and he would find a way to ensure the “viability” of its huge public debt representing 175.1% of GDP. He also assured that he will take steps to stimulate growth, including tax cuts.
An economy in steep decline
This optimistic speech is understandable on the a government that is in great political difficulty, but the facts seem hard to agree with Antonis Samaras. Certainly, the country has seen the slow decline in GDP in the first and second quarters of the year, as the annual decline was 1.1% and 0.3%. But are these successes? The Greek economy has lost nearly a quarter of its value since 2009 The decline can not be infinite and after rain comes sunshine (and vice versa), but up the slope may take considerable time. Meanwhile, the national wealth share will remain at a lower level than before the crisis.
Importance Tourism
In fact, this “recovery” is in the wrong eye for several reasons. First, because the third-quarter figures are inflated by the tourism sector, the only truly enjoying Greek “adjustment.” The sector accounts for 17% of GDP and has benefited greatly from the desertion of some countries such as Tunisia and Egypt by Western tourists. But this good performance of tourism does not address the issue of the economic model of a weakly developed and do not rely on exports of goods only to redress the country. Especially since the European recovery is very low and negative inflation weighs on margins. It is not certain that even at the end of the year, the government can get the 0.6% growth it is today. In this case, it will have to lower its fiscal targets, request new European aid and even tighten the screw. Concerns are emerging lately on this subject in Greece.
The issue of debt
The other problem is obviously that the stock of debt. Europeans set up to save Greece a system of “financial cavalry”, consisting borrow from the IMF and European countries to deal with its private deadlines. But when Greece will have to repay these debts, they will weigh very heavily in its budget. We must therefore make reservations and keep a tight fiscal policy. However, it is unclear the European Stability Mechanism, the ECB and the IMF agree to a Greek default. In this case, the taxpayers of several EU countries would inevitably be involved. Athens is trying to get as possible, but without deep cuts in the stock of debt, the Greek recovery will be subject to a sword of Damocles constantly making implausible promises of tax cuts Antonis Samaras.
The Gordian knot of political
The third problem of Greece is political. Austerity ravaged the Greek political system and made it highly unstable. The current coalition between conservatives and socialists Pasok is very unpopular and seems unlikely ever to be repeated. The latest poll in the country and built by Alco institute gives no more than 30% of the vote to those parties who, unlike in 2012, can not rely on the “bonus” of 50 seats out of 300 allotted to the party won. Coalition of the Radical Left, SYRIZA, has indeed become a lead of 4 points that grew steadily over the Conservatives, with 28% of the vote and has become the largest party in Greece. But who can she govern? Communist KKE (5% of the vote) remain very opposed to an entry in a government led by SYRIZA. Finally, the neo-Nazi Golden Dawn remain strong with 8% of the vote. In short, the situation could become trapped if elected
But Greece is facing an important deadline. Than the election of the president at the beginning of the year next. If no candidate receives a majority of the required two-thirds, ie support from the opposition and the government, Vouli, parliament will be dissolved de facto and it will go to new elections. Antonis Samaras is therefore trying to reassure her, but the situation remains very difficult.
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