FollowIt’s great to see some positive news after a couple of years when news covering the recession were rather bleak. The U.S. faces some serious, even though fragile, signs of economic recovery. Some minimum wages increased while the inflation stays in target.
After many years of continuous struggling, Greece sees the light of day economically speaking. The recession that started in 2008 hit Greece more than most other countries. Right now, Greece still struggles with a debt accounting for around 175 percent of the country’s GDP. Following strikes and popular revolts, the latest conservative government seems to please the rating agencies. Greece rating position increased, Moody’s announced on Friday. From Caa3, Moody’s raised the ratings by two stages up to Caa1.
“The first factor behind the upgrade of Greece’s rating is Moody’s strengthened expectation that the general government debt to GDP ratio will start declining in 2015, after peaking this year according to Moody’s estimates at around 179 percent of (gross domestic product),” the agency said. “Moody’s considers that Greece’s fiscal outlook is more resilient than in the past.”
Greece rating position increased but the country still faces financial problems
Greece was bailed out in 2010 with about $308 billion by the EU and the IMF. But this is not the end for Greece’s problems. Another loan is expected to be contracted in the fall, because the debt level remains too elevated.
Right now the Greek government has to follow the international lenders’ instructions in order to walk on the safe path. If there was a time for radical solutions, the momentum is lost. More so because Alexis Tsipras, the European Left candidate for the presidency of the EU did not manage to win the elections.
Two other rating agencies, Fitch and Standard&Poor’s, maintain Greece’s credit ratings in the junk area. For Moody’s, politics is interfering with numbers. The rating agency is concerned about the prospect of early elections in Greece. Moody’s refrained from awarding a higher rating to Greece as a consequence.
Jean-Claude Juncker, the conservative president-elect of the European Commission will pay Greece his first visit next week. He will meet Antonio Samaras, the Greek Prime-Minister and fellow conservative to talk about fiscal discipline in the public sector. The money given by the EU and IMF came with strings attached. Greece had to undertake drastic budget cuts which lead to increasing unemployment and overall poverty levels. Greece rating position increased by the notches, although the country has to borrow money again in the fall.
