With a tumultuous decade behind it, Greece’s outlook presents two distinct sides. In the near term, there are numerous developments that support a positive outlook for the Greek economy as well as for holders of Greek government bonds. The economy is finally growing at a moderate pace, and the expansion will likely accelerate somewhat in 2020 on improved investment expenditures and household consumption.
Yet, structural impediments continue to cloud Greece’s medium-term outlook. In particular, subdued potential growth threatens the renewed deterioration in external balances and risks exacerbating the fragilities of the banking system.