Greece Has High Debt
The income convergence that has been discussed as of late in
Greece may have just hit a standstill. The amount of
still-high level of government debt and competitiveness
concerns – even though they have had an “A1” long term
rating for their bonds and notes – is a concern when looking
at debt consolidation.
The concern is that the amount of debt consolidation that
would be needed could have a potentially negative impact on
wage increases. But a slowdown itself would not be enough to
put their ratings under pressure.
According to a recent report by Moody’s, Greece has made
progress towards real economic convergence with the rest of
Eurozone this past year. Its growth was 4% which was driven
by a strong domestic demand on the increase of wealth and
income.
Plus with the amount of immigration – they have had a large
amount of domestic absorption. All of these things end up
costing them and increasing their debt consolidation ratio.
With their fiscal consolidation being impressive over the
past few years, and their deficit actually shrinking to 3% -
they were set up for a much better stance. However, with the
forest fires and social expenditures from political
campaigns the debt remains.
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