Greece Emerges as a Hot Investment Destination, Attracting Foreign Investors
Greece, known for its picturesque landscapes and ancient history, is experiencing a remarkable economic resurgence. As the country prepares for an anticipated surge in tourism, it is also attracting a different kind of visitor — deep-pocketed foreign investors who had abandoned Greece in the aftermath of its debt default over a decade ago.
In 2023, Greece’s 10-year government bond yields, which had once spiked above 40%, are now below 4%. This significant drop has made the country’s bond market the best performing in the euro area. Furthermore, Greece’s equity market has seen a staggering gain of over 40%, placing it among the top three performing markets worldwide. These impressive numbers have caught the attention of both individual and institutional investors.
The recent influx of outside money has propelled Greece’s stocks and bonds, with flows into these markets increasing by approximately 14% this year alone. Borrowing costs have fallen by more than half a percentage point, instilling confidence in Greece’s economic prospects. The country’s prime minister, Kyriakos Mitsotakis, aims to secure an investment-grade status from major rating agencies this year, which would open the door to even more capital inflows.
The revival of Greece’s economy can largely be attributed to its booming tourism sector. The European Commission projects that Greece’s economy will grow by 2.4% in 2023, more than twice the pace of the euro zone as a whole. In contrast, economic powerhouse Germany recently slipped into a recession. The transformation of Greece from a struggling nation to an economic success story has captured the attention of global investors.
Despite its progress, Greece still faces challenges. The country endured a prolonged recession and harsh austerity measures, leading to social unrest and protests. Additionally, Greece remains burdened by high levels of debt, and its gross domestic product per capita lags behind other euro area countries. However, the government, under the leadership of Prime Minister Mitsotakis, is determined to address these issues and improve the lives of its citizens.
Mitsotakis plans to raise the minimum wage, boost household incomes, and attract more foreign investment. These initiatives, along with European Union assistance funds and government reforms, are expected to create a favorable investment landscape in Greece over the next few years. Foreign investors have taken notice, with a significant increase in inflows into Greek stocks and bonds this year.
To achieve investment-grade status and attract further investments, Greece will need to receive favorable ratings from major agencies, such as S&P Global Ratings and Fitch Ratings. The country’s potential readmission to prominent bond and equity indexes would also provide a significant boost to its investment prospects.
While Greece’s markets are relatively small and volatile, efforts are underway to improve liquidity and increase market valuation. Private and institutional investors who had previously overlooked Greece are now expressing interest, recognizing the potential for profitable returns.
As Greece aims to solidify its economic recovery, the global investment community awaits further developments in this remarkable turnaround. With its rich history, stunning landscapes, and a rapidly improving economy, Greece is well-positioned to become a sought-after investment destination in the years to come.
