The Mitsotakis government’s reformist agenda is steering economic recovery to the next chapter
Greece’s debt odyssey has finally come full circle. Like the hero of Homer’s epic poem, Greece’s emergence from a 10-year, tempest-tossed saga has now reached its nostos, or “homecoming,” regaining investor confidence and the hope of Hellenic people.
In 2019, the Athens Stock Exchange was the best-performing market in Europe, with a general index that gained 50% that year. Economic output reached 1.9% in 2019, expanding for the third year in a row, and a string of successful bond issuances marked Greece’s return to international capital markets in late 2019 to early 2020.
Under the watch of Prime Minister Kyriakos Mitsotakis, there is a palpable reformist spirit. Since coming to power in July 2019, Mitsotakis’ conservative New Democracy party has unleashed a raft of investor-friendly policies, including lowered corporate tax rates, which have gone unopposed thanks to a 158-seat majority in a 300-seat legislature.
Investors are observing these reforms with interest, especially German businesses that now look to build partnerships based on equality. “The narrative in Greek-German relations is changing. Our relationship is now one of equal partners and can initiate investments for the benefit of both sides,” Prime Minister Mitsotakis confirmed in a speech at the German-Hellenic Economic Forum last March. Indeed, far from being labeled as the austerity monger, Germany is now being fêted in Greece. “Germany is the honored country at this year’s Thessaloniki International Fair (TIF),” Prime Minister Mitsotakis added.
In addition, long-blocked privatization projects are being rolled out to drive economic stimulus. The program has attracted Germany’s Fraport, which has signed a concession agreement to take control of 14 regional airports in Greece. The move to sell state-owned assets also includes the Hellinikon Project, a gigantic €8 billion redevelopment plan for the former Athens airport that is expected to add 2.4% to the country’s economy.
GDP growth (2019)
billion cost of Hellinikon redevelopment project
new corporate tax rate, reduced from 28%
growth of Greek-German bilateral trade (2019)
regional airports will be controlled by Germany’s Fraport
Massive as they are, these projects represent only a fraction of the selloff. “Currently, 10 privatizations are active and we expect this number to reach 15 by year-end,” says Riccardo Lambiris, CEO of the Hellenic Republic Asset Development Fund (HRADF), the entity in charge of Greece’s privatization program.
Going into 2020, the German-Greek relationship appears more resilient than most. During the German-Hellenic Economic Forum, major deals between were signed despite the global economic uncertainty presented by the coronavirus pandemic.