May 25, 2013
What a difference a year makes. Last May Greece seemed to be heading out of the euro. Lagging reforms, political in-fighting and violent protests had worn out creditors’ patience. An election failed to produce a clear winner. Athenians stashed euros in safety-deposit boxes and under mattresses amid fears of instability and a chaotic return to the drachma.
Greece is still in recession, but recovery could be around the corner. The threat of “Grexit” from the euro has receded. Hedge funds are snapping up sovereign bonds and bank shares; one has made a bricks-and-mortar investment in a Greek energy company. Bail-out funds from the European Union and IMF are flowing in as reform “milestones” are reached. Greece expects to record a small primary budget surplus (ie, before interest) of about 0.5% of GDP. The economy should grow a little in 2014 and by more than 2% in 2015.
This summer should see a record 17m tourists crowding Greek beaches. Bookings from Germany and Russia are soaring, say travel agents. A projected rise of €1.5 billion-2 billion in tourist revenues will give the budget a boost, even though many hoteliers are struggling to service bank debts. Greek contractors expect to resume work in the autumn on €6 billion of EU-financed motorway projects stalled since the crisis. They could create 30,000 jobs.