General elections are due to take place next year and will likely deliver a mandate to the opposition party New Democracy. The economy is faring better than others in Europe, with growth at around 2%. Though much better than past years, GDP performance is well below what many had forecast. If New Democracy takes over as the opinion polls suggest, the party is likely to prioritise tax reduction and a simplification of the business environment. That in our view should be a catalyst to falling borrowing costs.
The outcome of the next European elections maybe as important for Greece in the long term as it may affect the EU strategy on migration and the allocation of EU cohesion funds. Alas, nothing seems to be moving forward quickly at the European policy level, so we caution that any result from the election will take time, perhaps years, before having a significant impact on the economy.