Prime Minister Antonis Samaras has persuaded investors to buy the story of Greece’s recovery as manufacturing recovers and unemployment starts to fall. Now he has to win over voters.
The premier heads into elections for the European Parliament on May 25 on the back of Greece’s first bond auction in four years and with the economy poised to return to growth later this year. With more than half the country’s youth still without work, polls suggest voters aren’t ready to credit Samaras for the changes just yet.
While New Democracy trails Syriza, the opposition group that rejected the terms of the bailout packages, the bigger threat to the government may be the collapse in support for Samaras’s coalition partner Pasok. Papandreou’s Pasok plunged to sixth place with just 5.5 percent of the vote in a recent poll as voters blame the party for the country’s economic meltdown.
Samaras’s governing coalition has 152 lawmakers in the country’s 300-seat legislature. The prospect of the 27 Pasok lawmakers withdrawing their support could deter the foreign investors helping to fuel the recovery, according to Megan Greene, chief economist at Maverick Intelligence and a columnist with Bloomberg View.
“If there were snap elections and investors were spooked by the prospect of Syriza being the negotiator for Greece, it could really hurt the Greek recovery because it’s so fragile,” she said in a telephone interview.
Greek bonds fell, with the yield on 10-year debt rising 51 basis points to 6.81 percent while the Athens’ Stock Exchange benchmark index dropped 4.6 percent at 5:52 p.m. in Athens today, even as data showed the economy contracting at its slowest pace in four years in the first quarter. Gross domestic product fell 1.1 percent compared with a year earlier, exceeding economists expectations for a 1.3 percent decline.
The economy’s improvement in the first quarter comes after a string of good news for Samaras. The country returned to the bond market last month for the first time since 2010, stocks have risen 15 percent over the past 12 months and yesterday Standard & Poor’s raised its rating on four Greek lenders including the country’s biggest, National Bank of Greece.
Surveys of purchasing managers show that manufacturing returned to growth this year and the European Commission forecasts that the unemployment rate, which peaked at 27.3 percent in 2013, has turned a corner and will fall to 24 percent next year.
In the May 10 Kapa Research survey for To Vima newspaper that saw Pasok fall to sixth place, Syriza led New Democracy by 23 percent to 21.7 percent. The pollster questioned 1,149 people between May 6 and May 9.
Anther poll today by VPRC for Epikaira magazine gave Syriza a 3 percentage-point lead over New Democracy and placed Pasok seventh with just 3 percent. VPRC surveyed 1,003 people on May 9 and May 13 and gave a 3.1 percent margin of error.
Syriza is trying to consolidate its support after the 2012 general election propelled its leader Alexis Tsipras into the international spotlight. The party aims to use a victory in the European elections to try to reverse the budget cuts that were imposed as a condition of Greece’s two bailouts.
“Syriza wants a clean victory in order to put an end to the catastrophic path of one-sided austerity and great depression,” Dimitris Papadimoulis, a Syriza candidate, said in an interview. “If Syriza gets a comfortable victory, or, even better, more than the sum of votes of New Democracy and Pasok, then we will see positive political developments.”
Greece’s political geography still remains in flux after two general elections in six weeks in 2012 that threw the country’s membership of the single currency into doubt after it had completed the world’s biggest sovereign debt restructuring. Samaras emerged from those votes to lead a country that’s lost a quarter of its gross domestic product in six years of recession and where unemployment is at 26.5 percent.
Source: Bloomberg
Source: Bloomberg
