The festive “Rastoni” of Easter has officially ended and from today (22.04.2025) the Ministry of Finance officials (Ministry) again lift the sleeves for the next big “appointments” that will judge a lot about the future of Greek growth and our fiscal stability.
Indeed, the coming months are particularly important as the Ministry of Foreign Affairs will fight “battles” for the country to get the highest possible benefits in a series of decisive fields for the goals of growth, surpluses, debt reduction, etc.: defense spending, duties, absorption.
Awaiting for the escape clause
Although the recent Eurogroup and Ecofin meetings the issue of activating the escape claus and terms for it, it was raised on the table, as executives of the Ministry of Finance explain the Member States have not yet been a complete picture of what the benefits of each side could be. Indeed, in his statements to a recent visit to Greece, the president of the Eurogroup avoided any relevant reference, with the Greek Minister, Kyriakos Pierrakakis, repeating the Greek position on the need for a beneficial, all Member States, the EU decision.
On the basis of the well -known schedule to date, Member States must apply for the activation of the escape clause by the end of April, the Commission will evaluate it in June, and the European Council will approve it in July.
As stated in the “White Bible” of the Commission, if the escape clause is activated, each country has the ability to deviate from the agreed cost increase limits, equal to the increase in defense spending in relation to 2021 (up to 1.5% of GDP per year), with a period of validity of four years.
The crucial trimester of duties
The time bomb that threatens, however, to overthrow every design is the evolution of the trade war.
Even the temporary cessation of US duties to European exports for 90 days do not negate the fact that 10% contributions to EU exports are already in place, along with Greek products.
According to a National Bank study, the horizontal duties increase of 10% to all EU exports to the US could reduce all Greek exports by about 1.7%. Accordingly, the negative effect on Greek GDP could reach 0.4% by the end of 2026.
If, after 90 days, no solution to US and EU negotiations is found, then the consequences of the 20% duty implementation will be even more painful.
The equation becomes even more unfavorable if the indirect impacts are taken into account, such as a possible slowdown on our main commercial partners in Europe and the blow to Greek tourism as the country’s product will become less competitive, putting doubted travel flows of the Greek euro.
In the “depth” the European semester
What will be the point developments and indications of what is going to come next month will also be burdened with the Commission’s estimates at the Spring Semester Exhibition 2025 for each Member State, along with recommendations.
In preparation for the exhibition, visits were made by EU representatives last month, so that the Commission would have the provisions and recommendations to Greece ready in late May, when the relevant documents for Member States are published.
It is crucial that this report is published in the midst of trade war and fears about the outbreak of a global recession and is expected to be interested in how this will affect the predictions of the Commission on Greece’s growth rates, primary surpluses, debt reduction, etc. Recovery, as we walk toward its final straight.
With foot in “Gazi” for the recovery fund
On how the Greek economy will move, a key factor is whether it will be able to defeat the “bet” of the absorption of the recovery fund funds, especially in the conditions of the trade war where the environment becomes extremely less favorable to investment.
By the end of the month, Greece must have submitted to the EU the final revised version of “Greece 2.0”, which is currently being processed by the Commission and the Greek Government bodies. This review contains particularly critical adjustments such as unleashing projects that did not proceed and replace them with others, in order to “not lose a single euro”, as they typically point out in the financial staff.
The final approval is expected in the summer. Greece wants to receive another € 9.4 billion of the 6th and 7th installment of the Recovery Fund in 2025 after having first completed 81 milestones and targets.
For these two installments, the 6th payment request should have been submitted in the summer after the approval of the new plan, and the 7th request by the end of the year, with the program ending on August 31, 2026. Before the 8th and 9th request should be made before.
Good evaluations so far, but there is also a continuation …
The S&P evaluation may have had a positive outcome for the Greek economy on April 18, but it is constantly being taken without the outcome being given a given, especially as we get more “deeply” in the trade war and their impact begins to appear.
All of the aforementioned factors will play their role in subsequent evaluations, five by the end of 2025.
Indeed, DBRS predicts that existing duties will have an impact on world state credit ratings and especially on Asia and Europe’s economies.
From how the country will take it to its subsequent evaluations by the rating agencies, it will also be judged whether it will continue to form an increasingly favorable environment for Greece in debt markets, while affecting business funding and investment, and thus growth rates and rapid decrease.
It should be noted that Greece’s subsequent ratings this year are on May 16th, on May 16th, on May 30, SCOPE, September 5th, DBRS, on September 19th, Moody’s, October 17th again S&P, November 7, Scope Ratings and November 14th Fitch.