Growth OK, but ASE not so

International credit risk rating agency Fitch has changed its outlook on Greece’s foreign currency ratings from «Stable» to «Positive.» «The Positive outlook reflects a track record of solid economic growth, which is expected to continue, and the secular, albeit gradual, improvement in public finances,» the agency said in a statement. Since coming out of recession in the early 1990s, Greece has made significant progress and is set to outstrip average European Union (EU) growth for the seventh consecutive year. While debt remains high, it is set to fall next year and to continue dropping as spending on state enterprises and defense declines. Short-term debt as a proportion of GDP has also fallen significantly in recent years, and a significant proportion of foreign currency debt has been converted to domestic currency debt following Greece’s accession to the eurozone. Regular transfers from the EU have also improved the country’s creditworthiness, although these transfers will inevitably decline as a result of the enlargement process. Fitch warned, however, that the government has not gone far enough with structural reforms, particularly with regard to pensions. Until more fundamental reforms are implemented, Greece’s ratings will continue to be undermined by the country’s demographics. In another report unveiled yesterday, investment bank UBS Warburg said that the Athens stock market, despite its three-year slump, offers few stocks at a significant discount from the prices of other European markets, making it unlikely to attract significant foreign capital in order to recover in the short term. An increase in the percentage of shares held by foreign institutionals is mostly attributed to the continuing exodus of Greek investors.