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Greece Country Risk Report Q1 2019

Greece Country Risk Report Q1 2019

With Greece's creditors still to agree on significant debt relief, a banking sector still struggling with non-performing loans (NPLs) and a government tied to primary budget surplus targets, Greece's growth outlook is subdued

This view is underpinned by severe structural issues facing the country, namely an unsustainable government debt load, a dire demographic profile, and Greece's scant progress improving productivity over the past few years

Although Greece will aim to run a 3 5% of GDP primary budget surplus in the years ahead, the country will remain dependent on bailout funds and debt relief measures from its creditors if it is to make any dent in its massive debt burden of around 180% of GDP

The ruling Syriza-led coalition will struggle to build support as disillusioned voters move to opposition parties

Greece will run a historically narrow current account deficit for the next few years, reducing previously systemic risks posed to macroeconomic stability from its large external imbalances Major Forecast Changes

We have made no forecast changes this quarter

Key Risks

With parliamentary elections scheduled for October 2019, the next Greek government could seek to challenge the reforms and fiscal targets agreed upon with Greece's creditors

Such an outcome would undoubtedly lead to growing fears of a potential 'Grexit', which would be net negative for Greece from a financial and political stability perspective However, the possibility of a 'Grexit' remains low, with little appetite from Greece or the EU for such a scenario Greece Country Risk Q1 2019


Executive Summary
Core Views
Major Forecast Changes
Key Risks
Country Risk Summary
Economic Risk Index
Political Risk Index
SWOT
Economic – SWOT Analysis
Political – SWOT Analysis
Economic Outlook
Economic Growth Outlook
Greek Economy Set To Fall Short Of Its Potential
GDP By Expenditure Outlook
TABLE: GDP GROWTH FORECASTS
TABLE: PRIVATE CONSUMPTION FORECASTS
TABLE: GOVERNMENT CONSUMPTION FORECASTS
TABLE: FIXED INVESTMENT FORECASTS
TABLE: NET EXPORTS FORECASTS
External Trade And Investment Outlook
Greek Current Account Deficits To Remain Small
Outlook On External Position
TABLE: CAPITAL & FINANCIAL ACCOUNT BALANCE
TABLE: CURRENT ACCOUNT BALANCE FORECASTS
Monetary Policy
The End Of QE: Risks To The Eurozone Banking Sector
Fiscal Policy And Public Debt Outlook
Greece's 2019 Budget To Provide A Limited Short-Term Fiscal Boost
Structural Fiscal Position
TABLE: FISCAL AND PUBLIC DEBT FORECASTS
Currency Forecast
EUR: ECB To Underpin Strength, But Downside Risks Persist
TABLE: EUROZONE CURRENCY FORECAST
Greece Country Risk Q1 2019THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS MACRO RESEARCH and is NOT a comment on Fitch Ratings’ Credit Rating. Any comments or data included in the report are solely derived from Fitch Solutions Macro Research and independent sources. Fitch Ratings’ analysts do not share data or information with Fitch Solutions Macro Research.Contents10-Year Forecast
The Greek Economy To 2027
Another Lost Decade Ahead
TABLE: LONG-TERM MACROECONOMIC FORECASTS
Political Outlook
Domestic Politics
Macedonia Name Deal Faces Greek Opposition
Long-Term Political Outlook
Greece Post-Bailout: Economy Poses Greatest Risk To Political Future
Operational Risk
Developed States
TABLE: LABOUR MARKET RISK INDEX
TABLE: LOGISTICS RISK INDEX
TABLE: CRIME AND SECURITY RISK INDEX
TABLE: TRADE AND INVESTMENT RISK INDEX
Global Macro Outlook
Continued Growth Divergence And Policy Risks Ahead
TABLE: GLOBAL ASSUMPTIONS
TABLE: DEVELOPED STATES, REAL GDP GROWTH, % y-o-y
TABLE: EMERGING MARKETS, REAL GDP GROWTH, % y-o-y
Index Tables
TABLE: GREECE – MACROECONOMIC DATA & FORECASTS

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