Reports point to economic recovery but also the risks

The Greek economy may be rebounding, but there are still risks that could derail this recovery, according to three separate studies published on Thursday by the Center of Planning and Economic Research (KEPE), BNP Paribas and the Economist.

KEPE said the economy has been in the recovery stage since the second quarter of the year and that according to its study’s baseline scenario the country’s gross domestic product could grow at an average annual rate of 2.4 percent up to 2020. That would lead to the accumulation of 17 percent GDP growth by 2020, with the more optimistic scenario raising that figure to 20 percent.

However it noted that although growth rates are expected to be strong in the coming years, the recovery appears fragile for now owing to certain persistent economic problems and the uncertainty over negotiations with the country’s creditors.

“The uncertainty appears to be reflected in the spread of Greek bond yields [from the German bund yields] and the [recent] decline of prices on the Athens Stock Exchange,” KEPE said in its report.

The Economist argued that Greece was the surprise in the eurozone’s gloomy financial landscape, but added that the political risk could undermine the economy’s recovery. It warned that Antonis Samaras’s coalition government, which “pulled the country out of the abyss” after two consecutive elections in 2012, may tumble early next year. The foundations of this year’s growth were laid when the “Grexit” threat was banished, it said, adding that if concerns return, the “Grecovery” will certainly be affected.

BNP Paribas estimated that the biggest risk for the economy will be the presidential election in February, but the economy is set to grow 0.8 percent by the end of the year before expanding a further 2 percent in 2015 and 2.9 percent in 2016. It also anticipates a drop in the debt from 174.9 percent of GDP this year to 166.7 percent in 2016.

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