After hearing from over a dozen businesses, a few economists, several CU alum, and Greek political leadership, the student group is generally bullish on Greece. Interestingly, most people are willing to invest despite the fact that they are of the opinion that Greece has not yet hit rock bottom.
So what convinced the buyers?
First, Greece has improved its fiscal situation dramatically, having reduced its budget deficit from 10.5 percent to 1.5 percent of GDP between 2009 and 2012 and projecting a budget surplus of 0.4 percent in 2013. Second, we learned of a number of initiatives that should help boost economic output, including the privatization of Greek airports, the potential redirection of funds from pension programs to social safety net programs that can promote risk taking, and the direct infusion of euro funds into jobs training and education for the country’s desperately underserved youth population. Third, we heard from firms who were committed to a Greek recovery, despite their own diversified and global positions. Folli Follie, for example, has decided to use its global brand to promote the Greek brand. Similarly, Fage used its profitable and global position to reiterate its commitment to its Greek family of employees, stating that as long as they were able to, they would “never fire workers or reduce salaries”.
And the naysayers?
Greece is clearly in a precarious situation where the path to its recovery is entirely dependent on private investment, and at almost every meeting, Charlotte Ng ’14 grilled the leadership on how they could ever attract investors without clarity around the country’s future in the euro zone. In fact, I should clarify that of the 73 percent who said they would invest in Greece, over half of those respondents conditioned the investment on clarity of this issue. Also, despite its dramatic fiscal improvements, the country still has the enormous tasks of implementing structural reforms including further privatization, liberalization of closed industries, and tax enforcement. Cynics about whether or not Greece had the political will to accomplish these tasks included Kathimerini’s chief editor Alexis Papahelas, our very own Professor Charles Calomiris, and our Athens tour guide and historian, Niko (I’m sorry I don’t recall your last name!). Lastly, with unemployment at an appalling 27 percent and nearly 60 percent among the country’s youth, many simply wonder how much longer the people will tolerate these conditions.
A lot is riding on 2013. The country faces an end of May deadline to recapitalize its banks without an all-out nationalization of the industry, a critical factor in attracting private investment. The country is also eagerly awaiting the September German elections with the expectation that rhetoric around continued EU support will soften in Greece’s favor. While I personally share the same concerns of the naysayers, I am still generally bullish on Greece, mostly because I believe that the EU will not allow a euro failure.
Katerina Sokou ’13 and Martin Kleinbard ’14, thank you so much for this eye-opening experience. Travel companions, thank you so much for sharing this with me.
Dyanna Salcedo ’14
Follow my travels on Twitter! @DyannaSauce