What a difference a year makes, especially for Greece. That’s how the financial magazine The Economist has characterized the country’s slow recovery, although with caution that it came at a heavy social price in joblessness and human misery.
Greece has performed better than expected, but still has much to do,” according to the article Up, But Not Out. It reported that, “Last May Greece seemed to be heading out of the euro. Lagging reforms, political in-fighting and violent protests had worn out creditors’ patience. An election failed to produce a clear winner. Athenians stashed euros in safety-deposit boxes and under mattresses amid fears of instability and a chaotic return to the drachma.”
It noted that the country is still in a deep recession but there is no longer talk of being forced out of the Eurozone, that investors are eying a return, international loans are coming, the government expects a small primary surplus and that the economy could begin to grow a little next year and by 2 percent in 2015.
Also, Greece expects a record tourist season with 17 million visitors and a projected rise of up to 2 billion euros ($2.6 billion) in tourist revenues, contractors expect to resume work in the autumn on 6 billion euros ($7.75 billion) of EU-financed motorway projects stalled since the crisis. They could create 30,000 jobs.
Privatization is under way after several false starts. OPAP, the state gambling monopoly, has been sold for €712m to a consortium of Greek and east European investors. Gazprom is expected to bid for DEPA, the natural-gas monopoly. Sintez, a private Russian energy company, and SOCAR, Azerbaijan’s state gas producer, are vying for the gas distributor DESFA.
Prime Minister Antonis Samaras returned from a trip to China with promises of investments. Cosco, a state-controlled shipping operator that leases a container terminal at Athens’s port of Piraeus, wants to buy Olp, Piraeus’s port owner. Some consultants bemoan a lack of interest from the EU. But one says that, since its partial default last year, “Greece has become a frontier market that is too risky for western companies.”
Samaras, the New Democracy Conservative leader, has his coalition partners, the PASOK Socialists and Democratic Left under his thumb and they have agreed to all the austerity measures he’s imposing on the orders of international lenders, including firings of workers.
They put the blame on the EU and the IMF. “The Troika (the EU, European Central Bank and IMF) hold all the cards—you can’t negotiate with them,” said Administrative Reform Minister Antonis Manitakis. Street protests have faded.
But the magazine totaled the damage too and said the crisis has left a terrible legacy. “Five-and-a-half years of recession have wiped out over 25% of output and more than a million private-sector jobs. Tens of thousands of retailers and small manufacturers have gone under. Unemployment is above 27%, a record; for youths it is over 60%. With jobs disappearing, emigration by skilled young Greeks is growing; more than 34,000 went to Germany last year, a 43% increase on 2011. Poverty has become widespread, especially in urban areas. The suicide rate has doubled in three years.”
Yannis Stournaras, the Finance Minister, says Greece is two-thirds through a €13.5 billion program of spending cuts and tax rises, but the remaining one-third will be tough. “It’s like running a marathon: you’ve completed most of the distance, but you’re starting to get tired.”
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