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Economist Intelligence Unit: Markets will not easily settle down

29 April 2010 / 14:04:19  GRReporter
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"Financial assistance for Greece will come in time and in 2010 the country will have no problems with its creditors. Meanwhile, markets will monitor reforms in the country, but in our view they will not easily settle down. The cost of financing the country will remain relatively high for 2011 and 2012," said Megan Green, an analyst for Greece in the Economist Intelligence Unit. The 14th Round Table of the Economist and the Greek government was opened last night with a speech by PM George Papandreou and today work continues with the participation of ministers, bankers, businessmen, scientists and politicians. Fact is the package of measures undertaken by the government to reduce deficit, but the competitiveness is still very low. Unemployment is 11.3 percent, which is significantly increased. There will be no investment growth. The crisis is affecting even the best traditional sectors in Greece such as tourism and shipping. Doubts about the solvency of the country will remain in the long term. When Greece will be able to repay the money borrowed from the eurozone, is not clear. Economic growth is expected in 2012, but it will be small, are the provisions of Megan Green. 

"I see a dramatic change in Greeks. We have never had so many people at a morning session," joked Daniel Franklin, editor of the Economist. According to him the situation of Greece is very dynamic - what was unthinkable yesterday, is a real possibility today. According to him talking about the collapse of the eurozone before, was out of the question, but today it is one of the many possibilities. He reminded that Greece trades intensively in the Balkans and the crisis may have implications for these countries as well. "These are former communist countries in which Greek companies have a very energetic economic role. Bulgaria, Romania, Macedonia and Albania depend heavily on Greek investments. 10% of Bulgaria's exports come to Greece and there we may also expect some shock. Bulgaria is trying to deal intensively with Greece," said Daniel Franklin. 

"Many politicians have already expressed their willingness for Greece to leave the eurozone over a period of time and then to be accepted again. But currently there is no legal mechanism by which one country can be banished from the eurozone. Others argue that an exit from the eurozone must be accompanied by exit from the EU," said Laza Kekich, Regional Director for Central and Eastern Europe, director of the Office for forecasting national economies of the Economist Intelligence Unit. According to him the investments of Greek banks on the Balkans are relatively small and currently it does not make sense for them to withdraw from those countries. But if the situation in Athens continues to deteriorate, it is conceivable that they will begin to withdraw from there. "The crisis is an opportunity for catharsis so that Greeks will give up their bad habits, especially in the public sector, and regain their confidence, but it will be a slow process. When you have no growth with falling GDP, this is more difficult," warned Laza Kekich. 

Tags: Greece crisis economy The Economist Intelligence Unit
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