It seems like grece becomes a major newsmaker again. The thing is that Greece has just started presiding over the EU Council. On top of that, a couple of days ago, Antonis Samaras, the Prime Minister of Greece, announced that his country had finally managed to overcome the prolonged economic crisis. Still, the heartless stats indicate the opposite.
So, what is the state of health of the Greek economy? Can it affect the Euro currency?
As you usual, the experts working for Masterforex-V Academy will help us to answer these questions.
Greek Economy
So, after a few years of severe economic shocks when Greece was the source of scaring news and the object of doomsday predictions, the Prime Minister tells us that everything is OK and that the deep financial and economic crisis is gone, at least the country doesn’t have to lend on a monthly basis to survive anymore. Well, this is quite understandable if to consider the fact that a top-ranking official should be positive in order to avoid worrying the people and scaring away foreing investors, especially when your country is presiding over the EU.
Well, to tell you the truth, Greece does have chances to come out of the crisis in the near future. By the way, last month, Moody’s agency improved the country’s credit rating up to Caa3 with a stable forecast. At the same time, Greece’s budget balance is improving as well (the current deficit is around 1% of the GDP as opposed to 6,8% of the GDP a month before). Athens managed to reach the primary budget surplus equal to 2.5bn euro.
Still, it would be wise to remind you the cost of these achievements. This was done due to severe austerity rather than structural reforms. Salaries and pensions were cut by 25% (the minimal paycheck today is 684 euro, and the Eu demands further cuts to 600 euro). Along with that Greek households got constantly increasing prices on everything possible, from food to electricity. In other words, Greece saved on its people.
Still, independent experts say the crisis is not over yet. They tell us to look at some economic figures:
GDP has been declining for several years in a row. The rate is the highest one in the EU.
The rate of unemployment hits all possible records. Today almost 27% of the Greeks are jobless. This is the all-time high in the entire history of the country.
The country’s sovereign debt is immense and still growing instead of diminishing. For example, in the 2nd quarter of 2013 it increased form 160,5% up to 169,1% of the GDP. Well, this is far away from a decline to 117% by 2020 set as a target by the troika of lenders (the ECB, the EU and the IMF).
Well, as you can see, these economic figures do not lie. Experts say that Greece is still neck deep in crisis.
Or Maybe It Is Not that Bad?
Well, we know that Greece is in crisis despite all the high words said by the local authorities. OK, are there any real dangers for the Euro and the EU/eurozone?
Mario Draghi’s economic forecast is still moderate – some +1.1% in 2014. However, the experts working for Barclays announced Europe the world’s most promising area for investors in 2014. It is expected that European stock markets may gain 27%. It is good enough that international rating agencies are not threatening European countries with possible rating cuts. Still, these are gut forecasts, which may eventually find themselves far away from actual figures alter this year.
Still, 2013 wasn’t a good year for the eurozone. Its GDP shortened by 0.4% (y/y). That is why most currency strategists are negative on EURUSD, saying that it will go down to 1.33 by the end of Q1 2013 and down to 1.28 by late 2014.
Meanwhile, Masterforex-V Academy reports that EURUSD is recovering against the recent downswing (retracement). The current price is somewhere around 1.3670.
The bottom line is that 2013 was a bad year for Europe financially and economically. Still, Greece as a burden to the eurozone shouldn’t be either underestimated or overrated. Apparently. The EU won’t come out of the crisis all of a sudden. However, Greece is probably not going to bury the Euro since Greece is only some 1,5% of the eurozone GDP!
Still, Greece along with Italy, Spain and Portugal will be hindering the economic recovery. But this is not the end of the world… Let’s hope some day Europe will get out of the debt marsh…
