Moody’s says default not yet averted

A Greek default remains possible, according to Moody’s, with the international rating agency expecting the country’s economy to contract by 5 percent this year – against a government forecast of 4.5 percent – and for the recession to continue into 2014, too.

In its analysis on Greece issued on Wednesday, Moody’s argues that the risks that could sink the country’s economy and therefore its credit rating are still existent. These include the risks in the implementation of the second bailout program, exceptionally uncertain growth prospects, the political and social challenges the Greek economy is facing and the fact that the country’s debt is still considered unsustainable.

Although Moody’s acknowledges the improvement in the liquidity of the Greek economy, the banks’ entry into the recapitalization process and the government’s efforts to proceed with reforms, it concludes that the fragile social stability and the coalition government’s challenges could still see the country go bankrupt.

On the other hand, the head of the European Council, Herman Van Rompuy, added his voice to that of various European politicians in the last few weeks who have been expressing their optimism on Greece, saying on Wednesday that “the worst is behind us.”