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UBS expects clarity on conditions in Greek businesses after election

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Christian Fernsby |
UBS
European economies   It cautions however, that “Greek bonds continue to be sensitive”

UBS argues that clarity on who will govern Greece for the next few years may “only emerge after the presidential elections,” which is due by January 2020.

It expects bonds to continue to perform well, as “the political outlook as well as the government's large cash buffer should remain supportive.”

It cautions however, that “Greek bonds continue to be sensitive to global economic uncertainty and Italian political risks.”

Also, UBS says it keeps a close eye on “polls and European presidential appointments, party leaders' TV debate on 1st of July.”

“The Greek economy is showing signs of recovery. We expect this recovery to continue, even if constrained by global trade tensions. Nonetheless, Greece remains challenged by its debt overhang. The fiscal policy stance of the next government will therefore be key,” says.

But adds: “however, we do not expect clarity on business conditions until after the presidential elections (due by January 2020). A minimum of 180 votes in parliament are required to elect the president (in the third round of voting).”

Also UBS argues that that in a stable economic recovery, the sovereign debt to GDP to ratio should fall rapidly.

“Even in the event of a moderate global recession in the early 2020s (with the Eurozone economy contracting by 2%), the debt to GDP ratio should be substantially below today's levels in five years' time.”


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