Of optimist outlooks and of missing elements

by Antonis D. Papagiannidis

Fitch Ratings may have not been kind enough to grant Greece the much-awaited upgrade from BB to BB+, which would bring Greek paper just one notch short of investment grade (the same disappointment was felt when Moody’s denied the same upgrade last November – but be it said that Moody’s is keeping Greece three clicks short of investment grade); but at least it obliged by shifting its outlook from neutral to positive (as had Moody’s, too) and also by allowing for 8.3% growth for 2021, with a follow-up of 4,1% for 2022 and 4.3% for 2023.

Equally optimistic is – reportedly: Kathimerini – S&P Global Ratings, although keeping the expected 2021 rebound at 7.2%, but speaking of 5% growth in 2022 and 4.4% in 2023. Both rating agencies (S&P’s own rating exercise is for next April) think that Next Generation EU funds will soon start flowing into the Greek economy fueling investment-led growth; they also factor in the good track record of a resilient tourism industry throughout 2021, as well progress made by Greek banks in offloading their significant load of NPLs.

The missing element in both assessments in how the Covid-19 pandemic will play out in early 2022, since the Omicron variant makes its teeth felt in the first weeks of the new year, while Delta has not vanished altogether. In its latest Bulletin of Economic Trends (December 2021) IOBE/the Foundation of Economic and Industrial Research already noted a slight decline of consumer confidence due to inflation pressures translating into household real incomes regression.

IOBE was also careful enough to mention that the latest turn of the pandemic (and the social distancing /precaution measures taken to face it) have yet to feed into the performance of the economy. Also, support measures legislated so as to ease the impact of such measures have been of (quite) lower intensity than  those that economic actors have benefited from (and got used to) in earlier stages of the pandemic.