ATHENS: Nikos Mavrikos has fired half of his employees since 2010 as the Greek economy imploded, leaving his ship supply business on the verge of collapse. February marked a turning point, however: Mavrikos made a hire, his first in four years, Reuters reported on Wednesday.
“People are slowly starting to trust Greece again,” says Mavrikos, who hopes to take on even more employees soon at his family-owned business.
Greece is experiencing a remarkable financial recovery. Just two years ago, the country was expected to default and exit the euro, possibly setting off a messy unraveling of the entire currency bloc.
Today, after a tough regime of layoffs, wage cuts and reductions in government spending, factories are beginning to hum again, Greeks are starting to buy cars and other products again and the country is being courted in financial markets. The government is looking to the end of a tough international emergency aid program at the end of the year.
On Tuesday, Greece sold six-month Treasury bills at the cheapest borrowing cost since 2010. Most of the buyers were foreign. It is planning a return to the international bond markets for the first time in four years on Thursday, with the sale of a five-year euro bond.
“The image of Greece abroad has changed dramatically. Now the sentiment is changing in Greece as well,” Greek Prime Minister, Antonis Samaras, told Reuters in an interview last week.
“We are now at the edge where unemployment has stopped rising, no more people are being fired, and there are some very positive indications of new hires.”
For all the green shoots, it is too early to talk about long-term economic stability. Thousands of businesses closed across Greece last year.
Unemployment is at a record of nearly 28 percent, and large numbers of Greece’s 20- and 30-somethings have lost precious years of early employment that are likely to hamper their work and earnings potential for the rest of their lives. Strikes against austerity continue.
Greece’s debt is still a massive 175 per cent of economic output, and meeting a target to reduce that to 110 percent by 2020 will be difficult without economic growth.
In its latest report on Greece last November, the Paris-based Organisation for Economic Cooperation and Development said the country’s international bailout had not yet led to a true economic recovery. “Restoring growth, making it sustainable and dealing with social costs are essential,” the OECD said.
According to James Howat, an analyst at London-based Capital Economics, despite the fall in borrowing costs, direct investment flows remain weak — suggesting longer-term investors are not yet convinced by the first signs of economic recovery.
Mimis Vanos, who runs one of the biggest marine supply companies in Greece, has like his colleague Mavrikos seen an uptick in demand.
But he says the problems that have plagued Greece’s economy for decades — including widespread corruption, tax evasion and barriers to competition across industrial sectors — haven’t been solved. Vanos also says bank credit remains extremely tight.