In a new report, Moody’s said the election outcome Is “Credit Negative Because It Prolongs Financing, Liquidity and Economic Growth Risks”.
It warned that: Syriza’s position is in direct opposition to the Troika and will make negotiations for renewing the programme very challenging when the current agreement with the European Commission expires on 28 February.
Moody’s estimates that Greece needs to repay €16bn to repay the IMF, ECB and other official sector creditors. It also has to roll over more than €10bn of short-term debt (called T-bills).
All in all, we expect that the policy uncertainty and the reduced liquidity in the economy will weigh on Greece’s economic growth.
Following an expansion of the Greek economy for the first time since 2007 last year (which we estimate at around 0.6%), we currently forecast real growth at slightly above 1% this year.
However, we see significant downside risks because we expect investment and consumption levels to remain low and to be further dampened by the political and policy uncertainty associated with this election outcome.