Huh? I was told that Greece’s economy was recovering. Everybody has been saying that: the Greek coalition government, our Troika lenders, our EU partners, even our German ones. Apparently Greece’s recovery has been very fragile, a “giant” on shaking feet, a card-house built on sand that would be a risk to collapse, should a left-wing party win the upcoming elections. Therefore, ratings agency Fitch revised Greece’s outlook to negative.
Fitch Ratings Inc. on Friday revised its outlook for Greece’s long-term foreign- and local-currency issuer default ratings to negative, citing the political uncertainty ahead of national elections on Jan. 25.
The move, on the day that two of Greece’s biggest lenders asked the country’s central bank for emergency cash assistance, signals a possible downgrade.
Fitch affirmed the country’s long-term foreign- and local-currency issuer default ratings along with unsecured foreign and local currency bonds at B, which denotes high credit risk, and kept the country ceiling rating at double-B, two notches below investment grade.
While leftist opposition party Syriza, which is ahead in the polls, has moderated its policy stance since 2012, the rating firm said, Greece’s privatization program “would most likely stall under a Syriza-led government” and it could pressure public sector wages upward.
Another round of elections is also a risk, Fitch said, as negotiations with the so-called Troika of Greece’s International emergency lenders—the International Monetary Fund, the European Commission and the European Central Bank—would exacerbate frictions “and could cause a weak coalition to collapse.”
Prolonged political turmoil, combined with a lack of funding, would strain the government’s cash-flow by summer and derail the economic recovery, Fitch said. The ratings firm expects gross domestic product to grow 0.5% in 2014 and 1.5% in 2015, a downward revision of 1 percentage point from its November projection.
(full article WallStreetJournal)
If I were one of these mean Greeks I would say that Fitch might have been a victim of Nea Dimokratia fear-mongering campaign that has being fiercely and continuously propagating, that a SYRIZA-led government would kick the country out of the eurozone with all the catastrophic consequences.
But I am not….
