Greece's economy: From crisis to comeback, but can it last?

Once at the epicenter of Europe's debt crisis, Greece has emerged from a tumultuous period with a resilient economic rebound. This remarkable recovery is characterized by robust investments, improved credit ratings, and favorable macroeconomic indicators, signaling a promising future.

## **From crisis to prosperity**

Following the 2008 financial crisis, Greece faced severe economic challenges, necessitating three substantial rescue packages totaling €320 billion. Austerity measures led to a quarter shrinkage of the economy, high unemployment, and financial hardships. Despite this, recent years have witnessed a significant turnaround.

**Influx of investments**

Global giants like Microsoft, Pfizer, Cisco, JPMorgan, and Meta are making substantial investments in Greece. Microsoft's €1 billion data center and Pfizer's €650 million research hub underscore the newfound confidence in the country's economic stability. Renewable energy deals and multinationals' investments are projected to have a lasting economic impact.

**Macroeconomic indicators**

While the nominal GDP in 2022 was EUR 208 billion, below the 2008 pre-crisis level of EUR 242 billion, Greece's resilience is evident. Real wages stood at 71% of the pre-crisis level in 2022, reflecting the impact on households and businesses.

**Government initiatives and social support**

Prime Minister Kyriakos Mitsotakis has adopted a comprehensive approach emphasizing economic recovery and social components. Measures include raising the state monthly minimum wage to EUR780, reducing taxes, and advancing digitalization efforts. The surge in digital transactions, from 34 million in 2019 to 1.2 billion, highlights progress.

**Debt reduction and sustainability**

Greece's public debt ratio has seen a positive trend, decreasing from 206.3% of GDP in 2020 to 166.5% in Q2 2023. Over 70% of the debt, held by public creditors like the European Stability Mechanism (ESM) and the IMF, contributes to sustainability. The IMF forecasts GDP growth of 2.0% in 2024, surpassing the eurozone average.

![](https://hedonova.b-cdn.net/Hedonova%20images/%20All%20Hedonova%20blogs/Greece's%20economy%3A%20From%20crisis%20to%20comeback%2C%20but%20can%20it%20last/Greece_s-Economy-From-Crisis-to-Comeback-But-Can-It-Last-1.webp)

**Capital market rejuvenation**

Once relegated to "junk" status in 2010, Greece's capital market has experienced a resurgence. Fitch's recent BBB rating and reinstatement in bond indices underscore the country's commitment to sound budgetary policies. The 10-year Greek government bond yield, around 3.4%, is competitive, signaling renewed investor interest.

**Stock market performance**

The Athens Stock Exchange General (ASE) witnessed a substantial 43% rise in 2023, reflecting renewed investor confidence. Greek equities remain attractive, with a P/E ratio of 8.1 and a price/book value ratio of 1.1, offering potential opportunities for investors.

### Athens Composite Index

![Athens Composite Index](https://hedonova.b-cdn.net/Hedonova%20images/%20All%20Hedonova%20blogs/Greece's%20economy%3A%20From%20crisis%20to%20comeback%2C%20but%20can%20it%20last/Greece_s-Economy-From-Crisis-to-Comeback-But-Can-It-Last-2.webp)

**Future prospects and opportunities**

Planned IPOs and privatizations in 2024, especially in the infrastructure sector, are expected to provide additional momentum. Financial stocks, mirroring broader eurozone trends, present promising prospects. Greece's position to receive EUR 31 billion from the European Recovery and Resilience Facility and EUR 39 billion from the European Structural Funds until 2027 will significantly boost the economy.

## **Challenges ahead**

Despite Greece's impressive economic turnaround, challenges remain on the horizon. One critical aspect is the lingering impact of the past crisis on households and businesses. Real wages, still at 71% of pre-crisis levels in 2022, highlight the need for continued measures to uplift the standard of living. The government's focus on raising the monthly minimum wage and reducing taxes is a step in the right direction, but sustained efforts are essential.

Another challenge is the need for inclusive growth. While major investments from global corporations drive economic rejuvenation, ensuring that the benefits reach all sections of society is crucial. Social support measures must be fine-tuned to address disparities and foster inclusive development, ensuring that no one is left behind in the recovery process.

**Sustainable growth**

The commendable reduction in the public debt ratio requires a steadfast commitment to fiscal responsibility for enduring economic rejuvenation. Striking a balance between economic growth, environmental considerations, and social welfare is indispensable. Embedding sustainable practices ensures resilience, paving the way for a robust and enduring economy.

**Global economic dynamics**

Greece's economic trajectory is intricately linked to the broader global landscape. External variables, including geopolitical shifts and international trade dynamics, can influence economic stability. Navigating these dynamics demands sustained vigilance, adaptability, and diplomatic acumen to perpetuate positive momentum.

**Innovation and technology**

Greece's strides in digitalization are laudable, yet ongoing investments in innovation and technology are pivotal for global competitiveness. Embracing advancements like artificial intelligence, fostering a dynamic startup ecosystem, and ensuring digital inclusivity will position Greece as a trailblazer in the swiftly evolving global economy. Strategic investments and policies that anticipate and embrace technological shifts will fortify Greece's standing on the global innovation stage.

## **Conclusion**

Greece's journey from economic turmoil to stability showcases resilience and effective governance. While challenges persist, positive indicators, credit rating upgrades, and increased foreign investments paint a promising future. Greece stands as an attractive destination for global investors and a compelling example of recovery and reform in the face of adversity.

Greece's economy rebounds with robust investments and improved credit ratings, attracting global giants. Despite challenges, the capital market and stock performance reflect renewed investor confidence. Government initiatives and future prospects indicate opportunities for sustained growth. Challenges like inclusive development and embracing sustainable practices remain, but Greece's journey signifies resilience and reform, making it an appealing investment destination.

Greece's economy: From crisis to comeback, but can it last?

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