Greece, Battered a Decade Ago, Is Booming
It is one of Europe’s fastest-growing economies, and while investors and tourists are flocking to the country, memories of austerity measures are still fresh for Greeks.
· This month, DBRS Morningstar, a global credit rating agency recognized by the European Central Bank, raised Greece’s debt rating to investment grade.
· Microsoft is building a €1 billion data center east of Athens. Farther north, Pfizer is anchoring a €650 million research hub.
· Well over 10 million tourists swarmed into Greece this summer despite a spate of wildfires, bringing estimated revenues of over €21 billion.
[ABS News Service/25.09.2023]
Laden with debt it couldn’t pay back, Greece nearly broke the eurozone a decade ago. Today, it is one of Europe’s fastest-growing economies. In a significant acknowledgment of the country’s turnaround, credit ratings agencies have been upgrading their appraisal of Greece’s debt, and opening the door for large foreign investors.
The economy is growing at twice the eurozone average, and unemployment, while still high at 11 percent, is the lowest in over a decade. Tourists have returned in droves, fueling a construction frenzy and new jobs. Multinational companies, like Microsoft and Pfizer, are investing. And banks that almost collapsed have cleaned up and are lending again, benefiting the broader economy.
Greece still faces risks. Its mountain of debt has shrunk, but at 166 percent of the economy, it’s among the world’s highest. The country’s banks still hold a pile of nonperforming loans that is bigger than the European average. And the misery of austerity is still fresh for some people, made worse by stubbornly high inflation stoked by Russia’s war in Ukraine.
The country’s prime minister, Kyriakos Mitsotakis, a business-friendly conservative politician, was re-elected by a landslide in June after being credited with spurring a recovery by reducing taxes and debt. The government cut red tape for businesses and raised the minimum wage. The country is even paying back international bailout money ahead of schedule.
Mr. Mitsotakis hailed Greece’s return to investors’ graces. “I will never allow us to relive the trauma of a national bankruptcy,” he said a day after the latest upgrade.
Greece became the center of Europe’s debt crisis after Wall Street imploded in 2008. Ireland, Portugal and Cyprus were also forced to take international bailouts. But Greece had it the worst, requiring three rescue packages from 2010 to 2015, totaling 320 billion euros, or $343 billion, with bitter austerity terms. Household incomes and pensions were slashed. The economy shrank by a quarter, and hundreds of thousands of businesses collapsed as banks shuttered. By 2013, nearly a third of Greeks were unemployed.
Greece exited the bailout programs’ strict fiscal controls in 2018, and the government’s actions since then have earned confidence from the European Union. In 2021, Brussels policymakers approved another €30 billion for climate investments in Greece, part of a broader effort to bolster E.U. economies after Covid-19 lockdowns.
This month, DBRS Morningstar, a global credit rating agency recognized by the European Central Bank, raised Greece’s debt rating to investment grade, a move that opens the door for pensions and other big investors to buy bonds issued by the government. And that will lower borrowing costs for households, businesses and the government after the E.C.B. has been raising interest rates to fight inflation.
Moody’s, one of the largest credit ratings agencies, raised Greece’s debt rating on Sept. 15 by two notches, just short of investment grade, citing “profound structural change” in the country’s economy, finances and banking system.
Investors are jumping in. Microsoft is building a €1 billion data center east of Athens. Farther north, Pfizer is anchoring a €650 million research hub. American, Chinese and European companies are pitching renewable-energy deals. And investments by Cisco, JPMorgan, Meta and other multinationals are projected to have an economic impact worth billions of euros over the next few years.
Well over 10 million tourists swarmed into Greece this summer despite a spate of wildfires, bringing estimated revenues of over €21 billion. Construction has climbed on the mainland and on popular Greek islands, driven by a surging demand for hotels, Airbnb rentals and a program that lets foreigners get a visa to live in E.U. states if they buy at least €500,000 in real estate in Greece.