rating agenciesalthough they are widely aware that the next government, most likely to emerge from a second election, whether it be self-governing or the result of party cooperation, will follow the path of reform and development-oriented policies and support for sustainability Greek debt that have been drawn up indicate that the challenges he will face are significant and go beyond the economic front.

S&P focuses on Greece’s external imbalances, which he has long warned about, stressing that they have worsened in recent years. Such as explains “K” home analyst, Samuel Tillythe current account deficit (roughly defined as the sum of imports bought over exports sold) worsened sharply after the 2022 energy crisis to 9.7% of GDP in 2022 from 6.8% in 2021 (and just 1.5% in 2019).

At present, this appears to mainly reflect increased imports of capital and intermediate goods, which are expected to support future export potential. However, the failure to close the current account deficit will widen Greece’s over-reliance on foreign capital flows and suggests that competitiveness will continue to be a major concern. However, Mr Tilly notes that Greece’s current account receipts have more than doubled as a percentage of GDP since 2010, to more than 54% of GDP last year.

At the same time, he emphasizes that reforms that are considered important for the home to assess the country have not yet been completed. As he explains, it is important that the next day the new government demonstrates its intention to implement reforms that stimulate growth and maintain strong financial performance. “Reforms that we believe are important to spur Greece’s potential growth, such as completing a review of the judiciary and finalizing the national land registry, remain unfinished,” the analyst warns.

Analysts focus on the current account deficit, reforms, investment and demographics.

AND rating agency Moody’s stresses that while improvements in the reform process in Greece and on the fiscal front are evident in recent years, especially since 2019, there is still a lot of important work to be done.

The current government, he notes, has begun to address some of the structural problems of the Greek economy, especially those related to low levels of investment, by lowering Greece’s high tax rates, easing business rules, improving the investment licensing system, and encouraging privatization.

However, many serious problems remain, Moody’s notes.

Firstly, Greece remains vulnerable to external risks due to the current account deficit, which widened from 2019 until the pandemic, when it stood at 1.5% of GDP, up from about 15% of GDP in 2008. home, high energy prices coupled with strong consumption and investment will keep the deficit high in the coming years, despite improved exports of goods and services. In addition, Greece’s net international investment position continues to show a large and growing net liability position, exceeding 170% of GDP (as of 2021).

Secondly, the unemployment rate in Greece has improved significantly over the past ten years, but remains one of the highest in Europe, especially among young people and women. Income inequality is above the EU average. and, despite improvements in recent years, the percentage of people at risk of poverty is relatively high.

EndGreece also faces a highly unfavorable demographic profile, exacerbated by the immigration of a large proportion of young and well-educated people during the years of crisis. The share of the working-age population in the total population will decline by almost 9% by 2050, Eurostat predicts, and this is the main reason for the relatively weak long-term potential growth of Greece, estimated at 1.2% by 2070 according to the European Commission.

Fitch’s concerns are similar. As he notes talking to “K” director of the house, Federico Barriga, “despite recent strong performance, economic activity could slow down again due to structural constraints such as an aging population or failure to reform.”