Morgan Stanley sees progress but warns of political risks

The Greek economy is entering a reorganization phase thanks to the dissipation of uncertainty regarding its possible exit from the eurozone, Morgan Stanley said in a report published on Monday.

The international investment firm, however, notes that the greatest risk at the moment is the stability of the three-party coalition government under the burden of the prevailing social and political discontent.

The report states that the “temporary” support by the so-called official sector (namely the eurozone and the International Monetary Fund) to Greece is becoming quasi-permanent, noting that the transitional support has been extended under the commitment to keep Greece in the euro.

It adds that although an economic rebound is yet to begin, data on activity are getting better and better thanks to the banishing of euro exit fears, while the competitiveness gap is gradually being bridged given that labor costs are dropping.

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