Greece’s economy has witnessed recession again with two consecutive quarters of negative growth. The country’s GDP declined 0.6% in the fourth quarter after shrinking 1.4% in the third quarter.
However, the pace of contraction eased more than twice. Analysts had anticipated a 0.8% decrease. So the Greek economy proved more resilient than expected. Still, the fact of stagnation remains.
In 2015 the new government of Greece started its anti-austerity measures. However, Prime Minister Alexis Tsipras had to come to terms with the creditors.
Weighed down by the EU, the IMF and the ECB, Athens is developing its pension reform plan that aimed to raise retirement age and cut pensions. The situation is worsened by the influx of migrants.
Now the government is in need of assistance from the EU, but Brussels accuses Greece of taking insufficient measures to limit the flow of refugees. The European Commission even proposed to help Macedonia improve its border, leaving Greece alone.
The banking crisis in Europe is another issue. Last week European stocks fell with a massive selloff in bank stocks. Thus, Deutsche Bank saw its stock price falling by more than 37% this year. Greek assets were also sold off. So the question of Greece leaving the euro area becomes relevant again.
However, the situation can change for the better. On Monday Europe’s banks turned to growth unexpectedly. Experts say in case the financial sector solves its problems, investors would be no more interested in Europe and that would help Athens and the troika of creditors to reach a compromise quietly.
