By Tasos Mantikidis

Even as dark clouds gather over the international economic and political environment and a protracted electoral period creates new realities in Greece, government officials, entrepreneurs, investors and bankers are today participating in the second annual Capital Link investment conference in New York – organised in cooperation with the New York Stock Exchange and the backing of international banks – which in the past has attracted the Wall Street elite.

Greece from the viewpoint of international investment capital remains marginal. That is due to the extended electoral cycle and the fact that the dynamic of the global economic cycle is receding as political dangers increase.

In such an environment, in countries like Greece – which after the 2008 economic crisis never really recovered because they faced their own travails – recovery has been delayed and is progressing slowly. Consequently, they are in a more difficult position.

Higher interest rates in the US combined with higher bond yields confirm the existing difficulties in the international economy.

New eurozone bond issues in 2019 – when the European Central bank will end its bond-buying programme – will be at a higher level than in 2014.

As a result, market players wonder who will absorb the new European Government Bonds (EGB) without the support of the quantitative easing (QE) programme and what the impact will be on the market.

Serious Challenges
With Greece essentially barred from the markets now, due to the fact that the 4.2%-4.5% interest rate on 10-year bonds is prohibitive, economists are wondering at what interest rate Greece will borrow the 4-7bn euro it wants to draw from the markets in 2019. This is so despite the available 21.4b euro cash buffer, which can cover borrowing needs for about 22 months.

From the point of view of foreign investors, Greece is still confronted with serious challenges despite the “bailout memorandum exit”.

It is indicative that after the huge 27.8 percent drop in GDP – between the first quarter of 2007 and the third quarter of 2015 – the Greek economy stabilised. It reached a growth rate of about two percent in 2018-2019.

With investment at a low point, however, the wounds of the crisis cannot heal. The drop in investment continues to undermine the prospects for an increase in GDP growth, productivity, and the level of salaries and actual employment.

Limited growth continued, however, for the ninth consecutive quarter, as according to the provisional data of the Hellenic Statistical Authority, GDP grew by one percent in the first quarter of 2018.

For The City, the growth in private consumption remains weak – on average one percent in 2018, the same as in 2017 – but the rise in revenues from tourism in the spring and summer contributed to an increase in GDP, which is expected to settle at about two percent in 2018.

Investment is weak, and it is expected to decline by 10 percent this year.

These trends are expected to continue in 2019, with a projected growth rate of slightly under two percent in real terms.

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