Days after Athens tabled its ambitious post-Covid national recovery plan to the EU, dubbed Greece2.0 by the conservative Mitsotakis government, top Bank of America analyst Athanasios Vamvakidis called for vigilance and renewed efforts by the latter.
“The road to recovery isn’t covered only with rose petals, because thorns may arise, overturning the positive tempo in markets, the bond market and growth,” he warned.
Bank of America (BoA) expects the Greek economy to robustly rebound after the pandemic ends, forecasting a 2.7-percent GDP growth this year and 5.4 percent for 2022 – after an 8-percent implosion in 2020.
If these forecasts pan out, then pre-Covid-19 GDP levels will return by the end of 2022.
BoA adds that a recovery could be accelerated even more if the upcoming tourism season also recovers sufficiently and if Greece utilizes EU funds effectively.
“As long as the ECB’s QE program continues, we expect support for Greek bonds. A basic issue will come with the overview of the ECB’s strategy in September, and what will follow the end of the PEPP (pandemic emergency purchase programme) in March,” Vamvakidis told OT.
He noted that investors are currently very optimistic about Greece, something reflected in the demand for Greek assets.
Vamvakidis also said investors appear satisfied with the way the Greek government has dealt with the pandemic, and are pleased with a commitment by Athens for more reforms, before adding: “yet they want to see a strong implementation (of reforms) in the post-pandemic period”.
Conversely, he cited three distinct risks for Greece’s economic recovery, namely, an end to the ECB’s QE program, much stricter fiscal rules mandated after 2022, and sluggish implementation of reforms.
