Sep 5-6th, 2015, Greece’s ‘Grand Coalition’ draws nearer

September 5th

 

·         University of Macedonia’s new poll showed that SYRIZA and New Democracy’s popularity is equal at 27%. This is translated to an increase of New Democracy’s popularity by 5 percentage points vs. last week. The same poll shows that 33.5% of voters who have decided to abstain, voted for SYRIZA last January. In addition, a new MRB’s poll also showed that SYRIZA and New Democracy will draw elections, both showing popularity of 25.1%.

 

·         in both polls, Tsipras’ popularity has gone south (almost half vs. last spring) and fluctuates close to Meimarakis’ one who gradually gains ground as the new main figure in local political landscape.

·         according to all polls published so far, SYRIZA loses significant ground in young generation of 18-24 which used to be its stronghold in January’s election. The Golden Dawn (extreme right) appears to be the third political party at around 6%, SYRIZA’s governmental ally ‘Independent Greeks’ (ANEL) don’t succeed to enter in the next parliament (below 3%). In addition, PASOK seems to regain power (5%) vis-à-vis the other pro Europe party Potami and fights for the third position against Golden Dawn. Finally, KKE (communists) gains power vs. LAE (new Eurosceptic party created by MPS who left SYRIZA) which battles to enter the new parliament.

·         refugees’ crisis escalates and this impacts mainly Greece’s eastern Aegean islands and Athens’ city centre–low income suburbs. About 250,000 refugees have arrived to Greece who came mainly from Syria, in 2015. The European Commission Vice President Timmermans and European Commissioner for Migration Avramopoulos arrived in Kos where about 4,000 refugees stay at the moment waiting to find their way to Greece’s mainland. New clashes between Greek police and Afghan refugees were reported in Lesvos Island where there are about 15,000 refugees.

·         ahead of new recapitalisation of Greek Banks, Moody’s announced their downgrade to ‘C’, due to fears of bail-in.  It also foresees an increase of NPLs around 45% of total loans.

·         according to Bloomberg both Merkel and Hollande show preference on Tsipras as regards the implementation of structural reforms. However, they prefer to keep silent due to pre-election period.

·         according to EU Commission’s report Greece lost around 34% of total VAT revenues in 2013 (whereas EU average lost VAT revenues are recorded at 15.2%). In addition, the same source estimates that the total lost revenues during the period of 2009-13, reach the total amount of 35 bios euros.

Risk assessment: Although Greece experiences a record year in tourism, its state budget faces a significant hysteresis of revenues. The combination of capital controls and political uncertainty have cause a significant deterioration of local economic outlook. In addition, the on-going, escalating refugees’ crisis, adds additional risks. All above require both strong leadership and broad political consensus. All above, increase of probability of the formation of a grand coalition after forthcoming elections and this is positive for both Greece’s economy and geopolitical role.