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Scope Ratings: Growth of Greece’s growth this year at 8.9%

Her Eleftherias Kourtali

A new upgrade of the estimates for the development in Greece in 2021 is proceeded by the rating company Scope Ratings, which gives the best rating in our country – just one step below the investment level, although it does not yet belong to the companies that “listens” to ΕΚΤ. Thus, it now places growth this year at 8.9% from 8.6% before and much higher than the eurozone as a whole, while for 2022 it places it at 4.3% from 3.5% before.

It is worth noting that the performance of Greek GDP in the third quarter (+ 13.4% per year according to preliminary data from ELSTAT) exceeded market expectations that placed growth at 11.7-12.9% per year according to Bloomberg data, while according to analysts paves the way for an upward revision of the government target which stands at 6.9%.

According to Scope, in the medium term, the Greek economy will move at growth rates of more than 1.8% per year in the period 2023-26, thanks to investments which, overall, are expected to easily exceed the cumulative public investment of the last five years. However, he estimates that Greece’s long-term growth potential is more modest at 1% per year. Expenditure on dealing with the effects of this crisis and increasing medium-term growth corresponds to an estimated budget deficit of 10.2% of GDP this year, after 10.1% in 2020. This deficit is projected to narrow in 2022 to 5.2 % before being found at 3% by 2024.

The debt of the general government of Greece will fall to 194.5% in 2022, from 206.3% in 2020, but will remain significantly above the pre-crisis 180.5%. The high stock of Greek debt, as Scope notes, leaves the government vulnerable to turmoil in international markets, as the ECB will reduce its support during the crisis. On this basis, the key to the country’s credit prospects are the ECB’s forthcoming decisions on the future of quantitative easing after the PEPP, including the way in which the central bank chooses to address the Greek issue. As the house reiterates, if the ECB maintains flexibility in managing its balance sheet and continues to support Greece – this will support the sustainability of Greek debt.

Finally, as Scope points out, further upgrades to Greece’s ratings (BB +, positive outlook) will depend on factors such as the EU’s post-crisis policy framework, fiscal consolidation and Greece’s debt, medium-term growth potential. and reforms that support macroeconomic sustainability, while addressing the weaknesses of the banking system.

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Source From: Capital

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