Signs of growth returning to Greece

Signs of growth returning to Greece


By Lefteris Yallouros – Athens

Greece posted a current account surplus in 2013, for the first time since official data began in 1948, the country’s Central Bank said on Wednesday.

After seeing the recession ease in 2013 (the economy on average contracted by 3.7 pct in 2013, better than a previous forecast of 4.0 pct) and with the Greek government expecting a large primary surplus for the previous year, the news of a current account surplus is yet another sign that the economy is well on track to recovery.

Current accounts were helped on by tourism receipts. Tourism, the country’s biggest industry, rose 16 percent year-on-year to EUR 169 million in December, bringing total revenue in the full-year of 2013 to a record EUR 12 billion, up 15 percent from the previous year.

The Greek economy has always struggled with current account deficits. The current accounts surplus is, largely, the result of imports dramatically dropping due to the economic crisis.

However, the figures give a boost to the coalition government of Prime Minister Antonis Samaras, who would like to show that years of austerity are now bearing fruit.

Greek firms have become more export-oriented and gained some of their competitiveness back recently as a result of wage cuts across all sectors of the economy. Exports of non-fuel goods rose 2.1 percent to 14.2 billion euros in 2013.

With analysts pointing out that Greece’s foreseen return to growth could still be derailed by adverse shocks, the country’s government – facing a tough local election battle in May – is determined to avoid calling an early general election.

A report by HSBC was the latest to point out Wednesday that the greatest risk for Greece’s effort to exit the ongoing crisis relate to political factors and the possibility of the country being dragged into a lengthy pre-election period that would eventually see an early election being called next year. Such an event would be a major setback to reforms which are just starting to pay off.

Persuading EU counterparts to agree to grant the country debt relief sooner rather than later would possibly mean Greece was out of the woods for good. The government has strengthened its position at the negotiating table with the latest news on the economy front. With public debt standing at EUR 321.4 billion in 2013 – as official data showed Wednesday – it is considered certain the country’s lenders cannot turn a blind eye to the problem.