Political instability due to disagreement over the presidential elections threatens Greece’s small steps towards economic recovery, according to The Economist. Based on data released on November 14, out of 18 European Union countries surveyed, Greece was the only one showing a 0.7% output growth in the third quarter, with most countries showing 0.1% and 0.2% growth figures or negative growth. The article says that Greece’s recovery, or Grecovery as some analysts like to call it, started in the first quarter of 2014 with an 0.8% output increase. In the second quarter, growth was 0.3%, showing a downward trend. But the upward turn the Greek economy managed this year, was the first since the start of 2008. “Even though the euro zone as a whole is doing badly, the Greek recovery looks set to continue, at least in the short-term,” the article says. “According to the commission’s forecast in early November, the recovery should strengthen next year, when it expects the economy to grow by 2.9%. Growth would come from higher household consumption and investment, as austerity eases, together with a boost from net exports,” it continues. However, the optimistic outlook is threatened by political uncertainty. Prime Minister Antonis Samaras is in danger of stepping down in February, losing his chair to the leader of the leftist opposition party SYRIZA, Alexis Tsipras. The opposition is pushing for early elections, as the current parliament is unlikely to gather the 180 votes needed for electing a president of the republic. With presidential elections due in February 2015, it is very likely that Greece will go to premature elections. Opinion polls show SYRIZA leading, meaning that it is likely that the opposition might win the elections, evidently coming to conflict with the euro zone’s creditor countries, especially Germany. Foreign investors fear such developments and that was apparent when Athens saw Greece’s 10-year bond yields rising over 8%. The political instability may stall Greece’s slow progress towards recovery.
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