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From Greek crisis to credit upgrade: a decade of resilience

A decade ago, amid the turmoil of the Greek economy and society following the departure of the inept Socialist government in 2009, there was widespread anticipation of a catastrophic crash. Economists and analysts from various corners of the world forewarned of doom not only for Greece but also for the euro, the EU, and the European way of life as we knew it.

This is not to deny that Greece and its economy were facing a crisis. Excessive debt, extravagant spending, rampant corruption at all levels of society, unreliable statistics, and their impact on the country’s global reputation had taken their toll. However, with time and concerted efforts by Europe, the European Central Bank, and countries like Germany and France, Greece was given the opportunity to heal and rebuild.

Fast forward a decade, and those dire predictions of failure and collapse now seem extravagant. Recently, Moody’s Investors Service upgraded Greece’s credit rating by two notches, elevating it from Ba3 to Ba1. While it still falls one notch short of investment grade, it’s a far cry from the impending disaster of a decade ago that never quite materialised (although it loomed large on the horizon).

Moody’s also adjusted its outlook on Greece from positive to stable, further highlighting the positive trajectory of the country’s economic recovery and improvement.

Moody’s justified this upgrade by stating that Greece’s economy, public finances, institutions, and banking system are undergoing significant structural changes that will continue to enhance credit metrics and resilience against potential future shocks. They now anticipate an average annual real GDP growth of 2.2% for Greece from 2023 to 2027, a remarkable improvement compared to the meager 0.8% average growth in the five years preceding the pandemic.

However, it’s important to note that challenges persist, including a substantial current-account deficit and high government debt. Nonetheless, Greece’s journey from being a basket case a decade ago to achieving a two-notch upgrade stands in stark contrast to the struggles faced by the much larger U.S. economy, which has seen credit downgrades and increased political instability in recent years.

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