NEW YORK – Concerns of Greece’s departure from or expulsion from the Eurozone during the severe economic and austerity crisis, which necessitated a bailout of 326 billion euros ($353.71 billion), have given way to a surge in investor interest.
Following the 4 ½-year rule of the previous anti-business Radical Left SYRIZA government, which deterred foreign enterprises, the New Democracy administration led by Prime Minister Kyriakos Mitsotakis has successfully attracted them back.
As the COVID-19 pandemic recedes, Mitsotakis has expedited the country’s recovery, with numerous Information Technology (IT) and high-tech giants establishing operations in Greece to tap into the skilled workforce that remained despite the mass exodus of 2010-18 when the nation faced severe hardships and relied on bailout loans.
Greece’s economy now ranks among the fastest-growing in the Eurozone, a group of 20 European Union member states that utilize the euro as their currency. It has outperformed some of the countries that once belittled it during the crisis.
“The fear of Grexit no longer looms over Greece’s bustling capital city. In streets once marred by closed businesses, locals now express concerns about rising rents and the proliferation of Airbnb apartments,” reported The Wall Street Journal, highlighting the two-sided nature of the recovery.
However, it also acknowledged that Greece still has a considerable journey ahead to recover from the deepest economic slump experienced by any developed nation since the 1930s. The country’s Gross Domestic Product (GDP) remains 24% lower than its 2008 levels.
That makes Greece the second-poorest nation in the European Union, ahead of only Bulgaria in per capita GDP adjusted for purchasing power, according to the World Bank, a problem for Greece.
However, the article highlighted that the economy experienced a growth rate of nearly 6% in 2022, as the lifting of Coronavirus health restrictions successfully attracted tourists, serving as the country’s largest revenue generator and savior.
Greek industries are increasingly becoming adept at exporting, while foreign investors are discovering Greece to be a more receptive destination. The report also noted a decrease in the number of young people emigrating in search of better opportunities.
Dimitri Papalexopoulos, Chairman of Titan Cement and head of Greece’s influential main business federation, expressed, “Significant progress has been made, but it remains incomplete and reversible.”
Despite the progress, many Greeks are still grappling with the repercussions of austerity measures, including salary reductions, tax hikes, and pension cuts, which were attached to the bailout programs. The rich, as always, continue to thrive, and the shipping industry enjoys a virtually tax-free status.
However, certain challenges persist, as highlighted in the article. These include the sluggish judicial system, persistent tax evasion, corruption, low wages, and high taxes that can reach up to 45% of income.
Nevertheless, Greece has undoubtedly made remarkable strides from the darkest days of the crisis, symbolized by the tragic incident of a pensioner taking his own life under a tree in the heart of the capital, across from Parliament, which now seems like a distant memory.
Greece’s national debt, standing at approximately 170% of GDP, remains the highest in the European Union, despite the ongoing repayment efforts following the bailouts. Nonetheless, Mitsotakis has managed to revive the economy to a point where it is nearly considered investment grade, having moved away from its previous junk bond status.
This accomplishment has become a significant selling point for Mitsotakis as the May 21 elections approach, with surveys indicating that the economy holds greater importance for Greeks compared to other issues, temporarily overshadowing concerns such as a surveillance scandal and a tragic train accident that claimed 57 lives.
“In 2019, voters expressed discontent with high taxes, excessive bureaucracy, and insufficient job opportunities,” remarked Alex Patelis, chief economic adviser to the Prime Minister. “Four years later, the landscape has changed,” he added.
The government has made impressive strides in digitizing public services, surpassing the United States in utilizing phone apps, eliminating the need for paperwork, and providing remote access for COVID-19 vaccinations, as well as licenses and ID cards stored on smartphones.
Miranda Xafa, an economist and former government adviser, commented on the non-confrontational nature of most reforms. While digitizing government services resulted in redundancies among civil servants, the government pledged to avoid layoffs, according to Xafa.
While typical scenes of paper records piled in boxes on floors and civil servant workers yawning at their desks and neglecting phone calls and customers are no longer commonplace, the notoriously slow bureaucracy still presents a challenge.
According to the report, the employers’ federation is dissatisfied with the government’s application of digital technology to Greek labor regulations, such as the notification process for overtime work, without undertaking a comprehensive overhaul of those rules.
“We are digitizing a flawed process,” stated Papalexopoulos. “Let’s reexamine the processes before digitizing them. This is the type of profound reform that hasn’t been adequately addressed yet,” he added.
Mitsotakis has been supported by over 30 billion euros ($32.55 billion) in loans and grants from the European Union to mitigate the effects of the pandemic. This financial aid has been instrumental in overcoming inflation, which has subsided, as well as in subsidizing high energy prices.
Tourism is on track to surpass the 2019 record prior to the COVID-induced lockdowns, slowdowns, and severe disruption in international travel. Additionally, the shipping industry, despite its oligarchs registering vessels under flags of convenience from other countries, continues to thrive.
The article highlighted that manufacturing exports, which were previously limited, are also increasing. However, Greece’s recovery has led to an even faster rise in imports, resulting in a substantial trade deficit. If sustained, this deficit could reignite reliance on foreign borrowing, a challenge that plagued Greece before the financial crisis.
“There is a heavy dependence on imported goods,” explained Xafa. “The productive capacity in Greece is not diverse enough to meet the increased demand through domestic sources.”
In addition to the country’s physical strength, Greece’s small yet expanding technology sector is complemented by its reputation for skilled scientists and engineers, which attracts international IT and high-tech companies.
The startup scene, fueled by venture capital and EU funding, has experienced tremendous growth, with a market capitalization close to $10 billion, according to tech-sector investor Marco Veremis based in Athens, as mentioned in the article.
Foreign Direct Investment (FDI), though still at a relatively low level, has increased to nearly $7.6 billion in 2022, accounting for approximately a third of the revenue generated by tourism. Tech giants such as Google, Amazon, and Microsoft have established cloud-computing or data centers in Greece.
Furthermore, the pharmaceutical company Pfizer inaugurated a research center in Thessaloniki, the country’s second-largest city, chosen for its strategic location and availability of skilled workers at comparatively lower wages.
Source : The National Herald