GREECE: A SUPPLEMENT TO EUROMONEY/DECEMBER 1997Recent weeks have not been easy for Greece. The first nine months of the year were marked by booming markets and optimism about the country's place in Europe. The economy was flourishing. The government was popular. But since late October, little has gone to plan. The greatest problem has been the recent bond-market crisis which may have sustained repercussions. And then finance minister Yannos Papantoniou announced a belt-tightening "budget for convergence", designed to allow Greece to qualify for European monetary union (Emu). It has had a mixed reception. The recent problems do not spring from economic fundamentals. This is one thing that most people agree on. GDP growth, forecast at 3.5% for 1997, remains fairly strong. So what did start the turmoil? At this point, opinions diverge. The international crisis triggered by events in Asia is an obvious starting point, but there are other reasons: the liquidity shortage in the bond market, over-exuberance in the stock market and, possibly, speculation against the currency. However, there is one recurring theme: Greece's strange position of being both a member of the European Union and an emerging market. |