Economists’ reaction to the Greek deal

Financial Times
February 21, 2012

Janet Henry, HSBC: “Even assuming the new Greek programme proceeds as planned, the Greek crisis is far from over. With the economy currently in its fifth year of recession and already contracting by 7 per cent year-on-year in the fourth quarter, even the revised debt sustainability analysis looks optimistic and remember that Greece will still be subject to quarterly reviews, which could well mean that we are back to worrying about whether Greece will get the next tranche of funds by the summer.”

Sony Kapoor, managing director of Re-Define, an economic think tank specialising in European affairs: ““Even with this agreement, most of Greece’s problems lie ahead of it, not behind…One can’t help but get the feeling that everyone involved is going through the motions, doing what they feel they have to do, rather than what they want to or what they believe in.

“Confidence in the success of what has been agreed is rather low.”

Yiagos Alexopoulos, European economist, Credit Suisse: “In its debt sustainability analysis the IMF envisages a participation rate of 95 per cent to get to the desired debt level. Given the worsening terms of the PSI [private sector involvement] offer and the high participation rate needed, it seems unlikely for this to happen in a voluntary way”.

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