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Growth: Waiting for the greek investment shock

growth economic greece

Written by Konstantinos Manikas, Economist – Psychologist, Author

At last, we have the definitιve figures for the country’s development in 2019. The annual rate finally closed at 1.9%. I recall that from October 2018 when the budget was tabled, I predicted that for another year of SYRIZA’s governance, the prospect of significantly exceeding 2%, as stated, was virtually nil because of the negative impact of international conditions, the lack of strategic investment and the lack of attractive an electoral culture that creates a climate of volatility and doubt in the markets.

Even if we take into account the greater, than expected, impact of the world trade war, the inability of loose monetary policy to fill the void of investment resolve, but also the negative of continued paraphilia and contradictions around Brexit, it would not be a surpise if the final result for Greece, drove growth closer to 1.5%.

The 2nd and 3rd quarters recorded quite good performances, creating an expectation to continue with something equally or even more impressive. Of course, these quarters were based, again this year, on exceeding the goals of our tourism product which was also affected by the abnormal situation in the broader region. Developments in consumption have also been relatively improved, but insecurity remains as unemployment is still based on underemployment and very limited income increases.

n our country, government change has significantly improved the tendency to return to economic regularity, corporate taxation announcements have been warmly welcomed, and repeated declarations to unblock a series of investment plans that have stymied by the previous regime, created the impression that there is a magic wand that within a very short time can completely overturn the negative environment and bring immediate tangible results.

The great truth, which we have written about it countless times, is that any tax intervention requires a critical time, about eighteen months, of incubation and investment “return”. Also, as we have always emphasized, it is necessary to continue the reforms and, above all, to complete the steps that modernize the functioning of the state, digitize its functions and services and reduce bureaucracy.

Of course an investment shock is not meant without a completely stabilized financial system, with streamlined portfolio and the convenience of financing new business projects. And at this level there is still a way to go.

So patience is needed and persistence to policies that determine the best possible framework for an investor to develop his plans. As this continues and evolves and the negative impact of international conditions diminishes, the upward economic trend will stabilize, as it has already begun to appear in areas such as tourism and real estate.

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