Greece’s industrialists urged Greeks to vote “Yes” in Sunday’s referendum and warned that the country risks going down the same road that Argentina did in the previous decade, as the Hellenic Federation of Enterprises (SEV) drew parallels between the financial conditions in the two countries in its weekly bulletin on Thursday.
Just a few days before a crucial referendum on whether Greeks want to accept their European creditors’ reform proposals in return for rescue loans, SEV and all industrial associations around the country made a joint statement saying, “Yes to saving thousands of jobs and the return to normality.”
The industry associations said in their press release that “we are uniting our voices as we try to avert the threatened disaster and we are worried when we hear statements about so-called guarantees for the stability of the economy and bank deposits.”
SEV drew a parallel between the state of Greece today and that of Argentina in the 2000s, reminding that the South American country entered recession in 1998 and in December 2001 defaulted on external debts amounting to $93 billion, half of which had been loaned out during that three-year period.
The Argentinean peso was left to float, after the currency had long been pegged to the US dollar, and immediately depreciated, leading to a 40 percent increase in prices and an 11 percent drop in the real gross domestic product within 2002.
SEV noted that Argentina entered its crisis three years before defaulting, while Greece, whose per capita income is increasingly lagging the European average and approaching that of Bulgaria and Romania, has already had more than five years of crisis, the duration of which has seriously damaged production and the social fiber of the country.
The industrialists’ association concluded that without an unexpected improvement in conditions, Greece is likely to default on its debt payments to private investors within the next six months. That will put the country in selective default status, SEV warned, citing the Standard & Poor’s rating agency.