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Feature: Public bears mixed expectations over economic impact of Greek elections

Xinhua, January 22, 2015 Adjust font size:

The Greek economy has already felt the pinch of the upcoming general elections, slated for Jan. 25.

However, the nation's economic future remains the most important concern for the public, who expect both change and stability in the debt-laden economy.


The elections have put everything on hold. Consumers do not want to open their wallets to buy goods or pay taxes. In December 2014, tax revenues missed targets by approximately 600 million euros (696 million U.S. dollars), according to the Finance Ministry. In January, the trend is estimated to continue.

Greek government officials and businesses have reported that foreign investments have stopped amid the renewed uncertainty, while billions of euros have been wiped off the Athens Stock Exchange.

The National Confederation of Entrepreneurship and Commerce (ESEE) estimated a 10 percent decline in turnover from Christmas shopping compared to 2013.

ESEE President Vassilis Korkidis commented that the pre-election campaign has intensified concern. "Over taxation, credit dry up, unemployment and the Grexit bank-run default scenario will continue to trouble Greek businesses after the elections," Korkidis stressed.


In opinion surveys, the radical left SYRIZA party runs ahead of the incumbent conservatives and the party's rhetoric over a re-evaluation of the cooperation with international creditors who kept Greece afloat since 2010, still scares many domestic and international investors.

Amid worries of destabilization of the economy, default and Grexit if SYRIZA assumes office, the party assures the public such things will not happen.

"The climate is changing. People and markets have realized that it is wrong to expect any destabilization of the economic climate if we win," SYRIZA's chief economist John Milios told Xinhua.

"On the contrary, I have the feeling we are going to see what we saw in Brazil after the first electoral victory of President Lula da Silva, a very rapid positive turn," he said.

"Greece has enormous growth potential. Our policies will allow this potential to flourish," he said.

If the New Democracy party of the incumbent Prime Minister Antonis Samaras which brought stability remains in power, there is no doubt that a stable Greece will see today's anemic growth boosted, according to the party.

However, these promises being delivered are based on the assumption that talks with the European Union and International Monetary Fund lenders over debt relief will proceed with no friction.


With outright parliamentary majority seemingly out of reach for any party, concern over a replay of the parties' failure to form a coalition government after the first round of the 2012 elections, remains a possibility.

"The 2012 double elections and the prolonged political uncertainty at the time cost the Greek economy approximately 20 billion euros, excluding deposit flows amidst fears for a Greek exit from the euro zone," Anni Podimata, former vice president of the European Parliament and candidate MP with the centrist River party in the forthcoming elections, said in a recent interview.

Political uncertainty is Greece's worst enemy, in particular in a constantly changing international environment, all parties agreed.

Due to the elections, the resolution of issues that should have already been tackled will be further delayed, said economist Danai Zevgaropoulou.

She noted that "developments, such as the Swiss National Bank's announcement that it would no longer hold the Swiss franc at a fixed exchange rate with the euro, contribute to Greek economy's volatility."


However, some people remained optimistic. The extent of deposits flows in recent weeks shows that there is concern, but not panic, no bank run, state officials, opposition MPs and analysts underlined.

"There is minor turbulence, but no bank run. Ahead of the 2012 general elections, about 40 billion euros were withdrawn from Greece's banking system. This time it has been only 2 to 3 billion euros in recent weeks," Giorgos Stathakis, a member of SYRIZA's economic team, said during a press briefing this week.

As for the subsequent Greek banks' turn to the Emergency Liquidity Assistance (ELA) mechanism in recent days," ELA is not intimidating and doesn't result in banks having no cash," economist Nick Mitsopoulos explained to Xinhua.

The 40 million euros amount requested was nowhere near the 120 million euro credit line they had received two years ago, according to the economist.

Mitsopoulos was positive that any new government would most likely strike a comprehensive agreement with creditors in the first half of 2015. He said Greece would not see tourism, one of the strongest pillars of its economy, affected by the uncertainty.

Association of Hellenic Tourism Enterprises (SETE) President Andreas Andreadis shared the optimism. SETE has noted some slowdown in bookings but if uncertainty recedes soon, Greek tourism could celebrate another golden year in 2015, he said.

Regardless of the outcome of Sunday's elections, economic analysts noted that because of the polls, Greece will most likely have to revise down its targets for growth in 2015.

Even if a deal with lenders is reached in late February, the overall slowdown in economic activity in the first two months of 2015 could be covered, analysts say. Endit