Greece is one of Europe’s fastest growing economies today, which stands in stark contrast to where it was a decade ago, when it held a significant amount of debt it could not pay back. Recognising how far Greece has come since the 2008 financial crisis, credit ratings agencies have been steadily upgrading their appraisals of Greece’s debt. Furthermore, its unemployment rate is the lowest it has been since then, now at 11% from a high of nearly a third of all Greeks unemployed after 2008.
The Greek turnaround is reflected in recent changes in investment ratings. For example, in September 2023 DBRS Morningstar, a major international agency, updated Greece’s credit rating to investment grade to BBB (low) from BB (high). The sovereign credit rating upgrade was its most significant since its upgrade out of junk. Most sovereign nations that experience sovereign default never get close to investment-grade; Greece, on the other hand, was upgraded eight rating levels within six years.
While DBRS Morningstar raised Greece’s debt rating to investment grade, Moody’s recently raised Greece’s rating by two notches, short of investment grade. Corporate investors have naturally followed the credit rating agencies’ confidence in Greece’s economy and invested heavily in Greece – Pfizer is currently constructing a €650m research hub and Microsoft is constructing a €1bn data centre, for example. Despite a series of wildfires that have decimated Greece’s countryside, over ten million tourists still entered Greece in 2023, bringing in revenues estimated at €12bn.
There are also key features in Greece that make it a seductive country for international investment, such as its strategic location; well-established maritime infrastructure and transport; relatively low labour cost; and its beneficiary of the Next Generation EU recovery fund, set to receive €33bn (almost one fifth of Greece’s GDP). Additionally, future developments in the energy and infrastructure sectors are indicative of Greece’s rebound. Recently, the energy sector received major investments from Spain, France, and China. According to Eurobank, investments valued at €32bn in infrastructure and real estate, energy and decarbonisation, telecoms and digital upgrades, and tourism and manufacturing. Additional assets that should pique the interest of international investors are that Greece is a member of the European Union and European Monetary Union, its strategic links with several major markets, its high level of tourism, and major market reforms since the 2008 financial crisis. The numbers speak for themselves: UNCTAD’s 2022 World Investment Report measures FDI inflows to Greece as US$5.7bn in 2021, compared to $3.1bn a year earlier. The Bank of Greece shows the countries holding the most FDI stock as of 2021 were Germany (18.3%), Luxembourg (17.7%), the Netherlands (16.7%) and Switzerland (8%). Furthermore, Greece remains one of the most attractive investment destinations in Europe, with the UK taking up 43% (although this number has likely dropped in recent years due to the fallout of Brexit), France at 31%, Germany at 28%, Italy at 26%, Spain at 20%, and The Netherlands and Belgium at 11%. Greece follows closely at 10%.
While there have been numerous improvements, not everything in Greece is on track: its debt may have shrunk, but at 166% of its economy, it is one of the world’s highest; its banks still hold nonperforming loans slightly larger than the European average; the consequences of austerity’s effects are still felt by Greek citizens. Additionally, consumer confidence remains relatively low, there are comparatively weak industrial and banking sectors, and investment in R&D could see additional funding. And yet, Greece’s impressive rebound indicates that for a set of individuals with the capital in hand, it is one of the best places in the EU for foreign direct investment (FDI).
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