The crucial issue for investors is whether these positive trends can be sustained after the 2027 elections.
In a deep political intervention regarding Greece, UBS proceeds to warn that the period of Mitsotakis’ monopoly is heading toward its end and that the famed economic “miracle” promoted in recent years is definitively exhausted after 2026. The Swiss bank records the rapid rise of political risk, implying that the government’s positive narratives now collide with a reality that is becoming increasingly fragile for the markets, for investors and for the country’s own economic stability. Specifically, as UBS notes, the parliamentary elections are expected by July 2027. The key points for the electoral landscape are:
1) The electoral system is reinforced proportional representation, which grants between 20 and 50 bonus seats to the first party if it gathers at least 25%.
2) New Democracy (ND) remains the most popular party, however its support in current polls (around 30%) is lower than in the previous two elections (40% and 41%).
3) This lower percentage implies the need for a coalition government and a likely end to the single-party governance that has existed since 2019.
4) ND maintains a clear lead over the main opposition forces (PASOK, Hellenic Solution and Course of Freedom), whose popularity hovers around 10%–15%.
Also, UBS notes, “The Mitsotakis government has managed to successfully absorb EU (RRF) funds, implement key structural reforms and achieve a significant reduction of public debt through mild fiscal policy. The crucial issue for investors is whether these positive trends can be sustained after the 2027 elections.”
The usual wishful thinking
Beyond that, UBS attempts to reassure the markets with a series of optimistic forecasts for the Greek economy, forecasts that resemble wishful thinking more than realistic assessment. According to its estimates, the Greek economy is expected to maintain stable growth, with real GDP increasing by 2.2% in 2025, 2.4% in 2026 and 1.8% in 2027. At the same time, inflation is expected to gradually decline, from 2.5% in 2025 to 2.2% in 2027. A persistent problem will be the current account balance, which will remain negative but with a downward trend, from -5.8% of GDP in 2025 to -4.4% in 2027. According to UBS, the trajectory of Greek debt will continue to be downward, with the debt-to-GDP ratio reaching 145% in 2027 and estimated to fall below 100% approximately by 2035. As the Swiss bank notes, despite the fact that in 2027 Greece will remain, along with Italy, Brazil and the United States, among the countries with the highest debt, its reduction dynamic is strong.
However, behind this “rosy” narrative, it also warns that the decline in the working-age population (15–64 years) is projected around -6% by 2030, while the fertility rate remains below 1.5 children per woman. These demographic trends pose significant challenges for the labor market and social security. Also, Greece is expected to maintain high defense spending, around 2.5% of GDP, a fact that places the country high among EU states. However, the absorption of SAFE loans remains low, just above 0.02% of GDP, indicating room for improvement in the utilization of European resources.
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