With Greece's creditors not offering significant debt relief, and with theleft-wing Syriza government attempting to reduce the fiscal deficit viatax hikes instead of expenditure cuts, Greece's economy will remainon a very low growth trajectory. The economy will remain dependenton external aid by the time its current deal expires in 2018.
This view is underpinned by severe structural issues facing thecountry, namely an unsustainable government debt load, a diredemographic profile, and Greece's scant progress in improvingproductivity over the past few years.0 Although Greece's budget deficit is set to diminish in the years ahead,the country will remain dependent on bailout funds and debt reliefmeasures from its creditors if it is to make any dent in its massivedebt burden of around 180% of GDP.
The ruling Syriza-led coalition will continue losing support as disillusionedvoters move to opposition parties.
Greece will run a historically narrow current account deficit for thenext few years, reducing previously systemic risks posed to macroeconomicstability from its large external imbalances.