A Bloomberg report used six charts to show how the Greek economy went back into recession in the six months between the call for presidential elections in December 2014 and today.
According to the report, the New Democracy/PASOK coalition had brought Greece one step from a shy economic recovery. But when snap elections were called after the government failed to elect a new President of the Hellenic Republic, the recovery proved to be so fragile that the plunge back into recession was easy.
Investors were the first to flee after seeing leftist SYRIZA coming to power, promising to clash with creditors over bailout terms. Then Greek depositors started to withdraw massively, leaving Greece out of liquidity by the end of March.
The new leftist government faced massive cash outflows and had to heavily rely on the European Central Bank (ECB) for funding through junk bonds and emergency liquidity assistance (ELA).
“We’ve got massive capital outflow, we’ve got a huge debt that’s not sustainable, we’ve got a recession and there’s no investment,” Gianluca Ziglio, a fixed-income strategist at Sunrise Brokers LLP, told Bloomberg. “It’s a tragic situation from all points of view.”
Still, the Alexis Tsipras government has held back on agreeing terms demanded by creditors longer than many anticipated. The ongoing negotiations led to wild swings in the Athens Stock Exchange (ASE).
The report concluded with a quote by economist Holger Schmielding: “The more time passes, the deeper is Greece descending into a costly renewed recession and the harder it will be for Greece to get a good deal.”
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