Today’s Greece is reminiscent of Hercules, when he accomplished only half of his labors, reports Reuters. As noted, the country has done a lot of work to get out of the debt crisis, but it has not yet completed this work.

The same article emphasizes that “a large current account deficit, as well as corruption, undermine the attractiveness of Greece as a destination for investment.” However, according to the reviewer, it is not clear Kyriakos Mitsotakis he will do his best if he is re-elected.

Greece is no longer the “problem child” of the eurozone, he stresses. Investors seem positive about the prospect that Kyriakos Mitsotakis’ center-right party will win a majority in the June 25 second round of elections. The question is whether Greece will be able to attract investments in the amount it needs. “Something like this will require reforms that will not be easy,” the publication says.

Columnist Hugo Dixon reports that while Mitsotakis is rightly credited with attracting investment and advancing government digitization, his administration has done little to address the country’s other problems.

“Tax evasion is still rampant and the judiciary is weak. In addition, Mitsotakis showed little interest in investigating why the phones of Greek politicians, journalists and other prominent figures were “hijacked” by the Predator malware. Mitsotakis says his government is not involved,” the article says.

In addition, as highlighted, it is a fact that the Greek economy recovered from the Covid pandemic faster than in most EU countries, recording a cumulative growth of 15% over the past two years. But this is partly because the country has benefited from the reforms imposed by the IMF and the EU. as the price of salvation.

Growth has also been strong because Mitsotakis has spent large sums on benefits in recent years. For example, subsidies to protect consumers and businesses from the energy crisis were among the highest in the EU, Dixon explains.

Achilles heel of the economy

The article then focuses on the Achilles’ heel of the Greek economy, pointing out that Greece’s current account deficit was 9.7% of GDP last year. According to the Bank of Greece, the increase in energy prices is about 40%.

Greece is once again living beyond its means. This time, it is the private sector that is creating debt at a rapid pace. Consumption represents 67% of domestic income compared to the EU average. which is 50%. Moreover, investment still only reaches 14% of GDP and is expected to approach the European average of 23% in Mitsotakis’ second term, bolstering the country’s long-term growth prospects. The Bank of England expects European funds to make a significant contribution, totaling around 70 billion euros by 2026.

However, in the long run, the country will not be able to maintain a much higher level of investment if it does not save more. Otherwise, Greece will continue to run a high current account deficit, which could be dangerous in a world of higher interest rates, the observer notes.

What can Mitsotakis do?

“Mitsotakis can solve this problem,” Dixon says. “Initially, this could deprive citizens of benefits by focusing state assistance on the most vulnerable. He could also be more forceful in his fight against tax evasion, not only by the self-employed, but also by the oligarchs. But it’s unclear if he’ll take on this particular project. After all, during his first term, he granted amnesty to major tax evaders.”

The reforms, Dixon said, could eliminate the budget deficit, allowing the government to continue cutting debt as a percentage of GDP. Well-designed tax and benefit reforms could even reduce the country’s current unemployment rate of 12%, thereby boosting its productive capacity. All this will provide a cushion of safety if further shocks await Greece or the world economy in the coming years.

In 2022, Greece was ranked 51st in Transparency International’s Corruption Perceptions Index. That’s an improvement from 60th when New Democracy took over, but still one of the lowest scores in the EU, holding back investment.

Finally, Dixon argues that one of Hercules’ labors was cleaning out the stables of Augius, and Kyriakos Mitsotakis has a golden opportunity to do the same for Greece. “It remains to be seen if he captures it,” he concludes.

^{Source: Reuters.}