Fotini Charalampopoulou

There is a widespread sense of optimism regarding Greece’s economic trajectory, fueled by Standard & Poor’s recent elevation of the country’s credit rating. On Friday, the international credit rating agency raised Greece from BB+ with a positive outlook to BBB- with a stable outlook. This development was widely covered by the international media and seen as an endorsement of Prime Minister Kyriakos Mitsotakis’ economic policies and a restoration of investor trust in Greece.

The Wall Street Journal, in its recent article, describes Greece’s impressive economic resurgence. The country, once considered a fiscal liability in Europe, is now embracing free-market reforms, marking a notable transformation. Roughly a decade ago, Greece was mired in economic and political turmoil, raising doubts about its recovery prospects. However, the recent upgrade to an investment credit rating by Standard & Poor’s is seen as a significant milestone, although it only partially reflects the comprehensive changes implemented by Kyriakos Mitsotakis.

As The Wall Street Journal highlighted, S&P Global justified its decision to upgrade Greece by pointing to the “significant fiscal consolidation” undertaken during the summer and the electorate’s endorsement of ongoing policy reforms. Yet, the article suggests that such credit rating upgrades often come late for reasons that do not entirely capture the broader picture.

The Wall Street Journal explains that Greece had to take control of its public finances to address the excesses of the early 2000s, which ultimately led to the 2009 debt crisis. The upgrade would have materialized earlier if mere fiscal responsibility were the sole criterion for attaining investment-grade status. Greece, from 2010 to 2015, accepted three different bailout packages from its European counterparts, each laden with stringent fiscal conditions that were never fully met due to the absence of a cohesive development agenda.

The article details that the discontent following the first two bailouts resulted in the election of Alexis Tsipras. He nearly triggered a crisis in the Eurozone by resisting the bailout’s terms, even organizing a failed referendum on remaining in the euro before ultimately agreeing to a bailout deal with its own fiscal constraints.

In contrast, Kyriakos Mitsotakis, since taking office in 2019, has concentrated on fostering economic growth. He lowered the corporate tax rate, streamlined government operations, and actively promoted privatization. This shift in focus has generated optimism, leading to expectations of around 2.5% economic growth, a reduction in public debt from 189% to 146% of GDP, and increased investment, all despite the challenges posed by the pandemic, immigration issues, and various natural disasters. Mitsotakis’ strategy was affirmed by his comfortable re-election this summer.

Nonetheless, The Wall Street Journal notes that the Greek economy still faces challenges, particularly its overreliance on tourism and the need for substantial regulatory reforms to boost dynamism. The article underscores that Mitsotakis has recognized that an economic growth agenda is pivotal in garnering support for these reforms and maintaining fiscal stability. This, The Wall Street Journal concludes, is a lesson that Europe and America could draw from the recovery of their former “problem child” on the continent.