Economic growth of 2% could create better labour market.

GD/AD – 01/2019

‘Brussels’ is pleased with signs of a slow upward trend in ‘Athens’: targeted growth for 2019 should be around 2%, the Greek government estimates it will be a little higher. This could see potential economic improvements in the labour market. Greece has had to refinance itself on the markets since August 2018. As a result of the Italian-European budget dispute, interest rates due on the private market have risen unexpectedly; as such, the first attempt to approach the markets after years of aid packages was promptly postponed. The remaining financial buffer of EU funds and state capital amounts to around €24 billion, meaning that the Athens government does not have to test the market immediately.

Low levels of consumer confidence are unlikely to change much in 2019, reflecting its role as an indicator of poverty. Greek policy has led to massive tax hikes that disproportionately burden small and medium-sized incomes and small family businesses. The increase in VAT has had an additional negative effect on the purchasing power of end consumers. The use of private means to substitute state funding, such as private payments in the healthcare sector due to failings in the public welfare system, is also having an effect on impoverishment.

As the majority owner of the Port of Piraeus, China is investing in the New Silk Road via the Chinese state shipping company. Since 2016, the number of goods handled has tripled. If the US market were to become partially blocked for China, products could be redirected to Europe faster than in the past. Whether, and how many, Greeks get much needed jobs and under what conditions could also depend on how compatible the Hellenes’ traditional work and strike culture is with the iron discipline of the Chinese owners.

Greece’s burning social issues are still present but could never be solved without new jobs and investment from the outside. Labour disputes, strikes and social protests are par for the course for many, but they not only endanger the economic and social future of the country’s tourism. On October 20, 2019, Greece elects a new parliament and, according to the experts on the country, there are likely to be all sorts of surprises.