UBS report on Greek econ prospects mostly positive; points to 2020 of new president as key date

26 June 2019

A UBS report on Monday, two weeks before a snap general election in Greece, points to next year’s selection for a new president of the republic – a vote involving the 300 elected Parliament deputies – as the real milestone for Greece in the coming period.

Moreover, the Swiss multinational investment bank expressed confidence that demand for Greek debt will remain high, thus pressuring yields downwards, stressing that “… the political outlook as well as the government’s large cash buffer should remain supportive.”

“The Greek economy is showing signs of recovery. We expect this recovery to continue, even if constrained by global trade tensions. Nonetheless, Greece remains challenged by its debt overhang. The fiscal policy stance of the next government will therefore be key,” the report noted, while cautioning:

“…however, we do not expect clarity on business conditions until after the presidential elections (due by January 2020). A minimum of 180 votes in parliament are required to elect the president (in the third round of voting). In 2014, failure to muster 180 votes led to the change in power from New Democracy to Syriza.”

With center-right New Democracy comfortably leading heading into the July 7 election, as least as far as opinion poll results are concerned, and with a modest economic recovery underway, USB underlined that Greece’s sovereign debt to GDP to ratio should fall rapidly.

“Even in the event of a moderate global recession in the early 2020s (with the Eurozone economy contracting by 2 percent the debt to GDP ratio should be substantially below today’s levels in five years’ time.”

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