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Greek Economy Slowly Recovering

April 2nd, 2014

 

 

 

Nearly four years ago, Greece was on the rocks. But, signs show that Greece may be moving away from its recession.

 

In 2010, Greece lost control of its public finances, and international confidence in the country’s ability to pay sovereign debt fell.

 

As a member of the economic and monetary union of the European Union, known as the Eurozone, Greece has been promised €240 billion, or $330 billion, from Eurozone. Instead of preparing for a third bailout, Eurozone is instead focusing on the disbursements of the loans from the previous two bailouts given.

 

Greece has also undergone austerity measures, which has raised numerous protests from Greek citizens over the past few years over the measures taken.

 

Despite this, Greece has been successful in their austerity cuts, reaching a primary balance—when revenue exceeds spending—a year ahead of schedule, according to Bloomberg.

 

On Monday, March 31, Greece approved a reform bill to secure bailout aid. This includes hundreds of reform measures that lawmakers have agreed to over the past six months during negotiations with the European Union and the International Monetary Fund.

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Under this new law, Greece can acquire €9.3 billion of debt that is maturing in May. Included in this bill was also a €527 million spending package for poor citizens who were hit hard by the austerity measures.

 

Prime Minister Antonis Samaras is now hopeful for the disbursement of funds and how to continue to provide debt relief for the country. It is probable that Samaras will look for the extension of bond maturities and a continuing low interest rate on loans, according to Reuters.

 

This law was passed in preparation for the meeting with Eurozone finance ministers on April 1 to discuss Greece’s austerity progress.

 

But Greece is seen to be coming back from the world’s largest sovereign debt crisis that seemed to isolate the country from international money markets.

 

Piraeus Bank SA and Alpha Bank SA–Greece’s second and forth largest banks by assets and lending – have raised €2.95 billion in capital from foreign investors. This comes as a sign for new international confidence in Greece.

 

In Greece, the state-funded construction of a new opera house and national library, and a new subway line that will connect Athens to the main port Piraeus, has begun. OET (Greece’s largest cell phone service) and Hellenic Petroleum have both seen a rise in demand for the first time in nearly five years.

 

While the government expects the economy to grow 0.6 percent in 2014 and Greece has already obtained €218 billion of the €237 billion bailout, it cannot be said for certain how far along Greece is on the road to recovery.

 

Editor’s Note: Information from Bloomberg and Reuters was used in this article.