The developments in the Greek economy now seem almost exactly predictable. As the managers of the economic studies departments of the commercial banks say, the Greek economic figures have been developing in recent years according to forecasts, without major outbreaks and certainly without discouraging disappointments.
It is as if the economy has entered a long period of stable performance, or rather many small steps that create conditions of relative stability, but at the same time do not create an environment of leaps of progress that the country needs and the citizens expect.
Performances
The government prides itself on the achieved stability conditions, economic choice officials remind at every opportunity that domestic growth rates are maintained at twice the average European average, public finances achieve high primary surpluses every year, the revenues of the new budget for 2025 to exceed 67.5 billion euros against about 62 billion euros in 2023, public debt is falling rapidly, the country has been able to borrow from international markets at interest rates lower than those of France and remains attractive for investment, even though they fall short significantly above the European average.
And together they underline that, given the limitations of the new stability pact, they manage to ensure a level of public spending higher than the binding 3% of GDP from Europe, which for them is able to cover to a significant extent the growing social needs.
However, those who closely follow Greek economic developments know that the country, despite progress, has not escaped the heavy burdens it accumulated during the years of the painful and long-lasting debt crisis. High public debt is now easily manageable because its pricing is separate and far removed from that of the markets.
And this is because almost 80% of the debt belongs to our partners, to the states of the European Union who, at the critical juncture of 2015, assumed the role of lender of last resort, regulated and refinanced the Greek debt with extremely low interest rates.
Expiry date
Only 20% of Greek debt is freely traded in the markets. That is why Greece ended up borrowing cheaper than France. But this has an expiration date, it will not exist forever. 2032 is a turning point. Then the current favorable arrangement ends and official lenders will demand its free pricing on shopping terms.
It is likely that then the cost of servicing the public debt will double, with all that this entails for public finances. The misfortune is that economists predict that by then an additional burden will have emerged from the expected and upcoming new Insurance crisis due to the mass retirements of the baby boomer generation which has already begun but will take the form of an avalanche between 2028 – 2032.
Those who are aware of the conditions that will be formed then, insist that the country’s fiscal problem has not been solved, but follows us and will emerge soon under the weight of the double pressure from the public debt and from the invisible insurance funds.
The repayments
This is also the reason why the government is trying to repay early parts of the debt to the official lenders, as it is now with the repayment of about 8 billion euros. It is basically trying to limit the excess burden of 2032. There is no scope for renegotiation with the official lenders to extend the current arrangement, so there are not many alternatives left, beyond that of early repayment.
The third pillar
Accordingly, there are no magic solutions to the ongoing insurance issue. It is no coincidence that some raise the issue of a third pillar, i.e. the conversion of private insurance into pension insurance. Something that happens in the USA and China and explains their competitive advantage over Europe.
Such a choice for Europe and especially for Greece would mean the end of the welfare state, as recently recorded by Mario Draghi in his recent report, insisting that the recovery of European competitiveness must be done without losing the European social acquis that differentiates it from other world powers.
Growth spurts
After all, this is how they present the request and the demand from the policy for growth leaps, the only ones that can guarantee both the smooth management of the debt and the treatment of the long-term insurance problem. But leaps in development cannot be made without a leap in investment, public and private, domestic and foreign. And here begins criticism and doubt about the scope and effectiveness of the government’s economic plan.
The investments
Unfortunately, the country’s investment performance is limited, they mainly come from traditional business schemes, foreign investment despite progress is not as important as the government’s economic staff advertises and the smallest of the businesses are floundering, they do not have the strength or the motivation to operate massively and organized, and thus when they reach a certain size they are sold, and any income is usually converted into real estate and accounts that do not contribute to the Greek economy.
As prominent economists point out, the country in order to escape from its permanent fiscal misery needs to create a new generation of businesses and entrepreneurs in the broad circle of new technologies and in the competitive production of goods and services capable of substituting the current excessive burden of imports and strengthening the domestic added value. For better or worse, there aren’t many roads. The truth is, there are quite a few interesting endeavors out there, in the food, pharmaceutical, metal goods industry, and more.
Complete design
However, they do not constitute a critical mass capable of changing the course of things. Greece, in order to escape from the cycle of the problematic past, must enter a phase of intensive production and creation. And the government, which is so proud of its development and investment mood, must really act and finally put together a comprehensive plan capable of mobilizing and attracting everyone.
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