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2 Jan 2015
Euro risk concerns from a Greek crisis has lessened- BBH
FXStreet (Barcelona) - The Brown Brothers Harriman Team explain that the concern that a Greek crisis poses systemic risk of the euro area has lessened, with Greece now in repayment mode, with the surplus primary budget indicating there is no need for any fresh borrowing.
Key Quotes
“The position of both Greece and its official creditors has strengthened over the past couple of years. Greece's economy shrank by over a quarter and investment plunged by nearly 2/3. However, the contraction is over, and the economy has begun expanding. The IMF forecast Greece to grow by almost 3% through 2019.“
“More importantly, for its negotiating position, Greece is running a primary budget surplus of around 1.4% last year. By running a surplus excluding debt servicing costs, means that Greece no longer needs to borrow fresh funds. It is in repayment mode.”
“The concern that a Greek crisis poses systemic risk of the euro area as a whole has lessened. Spain and Ireland, for example, are on the mend. The banking system is stronger, even if not completely healthy. Officials have created greater institutional capacity, including facilities such as the European Stabilization Mechanism.”
“Peripheral markets have shown less sensitivity to developments in Greece. We note that Italy sold ten-year bonds last week at record low interest rates.”
Key Quotes
“The position of both Greece and its official creditors has strengthened over the past couple of years. Greece's economy shrank by over a quarter and investment plunged by nearly 2/3. However, the contraction is over, and the economy has begun expanding. The IMF forecast Greece to grow by almost 3% through 2019.“
“More importantly, for its negotiating position, Greece is running a primary budget surplus of around 1.4% last year. By running a surplus excluding debt servicing costs, means that Greece no longer needs to borrow fresh funds. It is in repayment mode.”
“The concern that a Greek crisis poses systemic risk of the euro area as a whole has lessened. Spain and Ireland, for example, are on the mend. The banking system is stronger, even if not completely healthy. Officials have created greater institutional capacity, including facilities such as the European Stabilization Mechanism.”
“Peripheral markets have shown less sensitivity to developments in Greece. We note that Italy sold ten-year bonds last week at record low interest rates.”