Can Greece's General Election Set Off A New Wave Of European Debt Crisis?

So far, the impact of the Greek election turmoil on the economy is still mainly confined to the country. Even the once heavily indebted countries have little influence: Spain's 10 year treasury bond yields were 1.67% and Italy's 1.98%. Although the yields of these two countries have risen, they are closer to Germany than Greece. As a haven for European funds, the yield of the 10 German treasury bond fell to a low of 0.54% on the 29 day.

On the same day, European stock markets were also generally stable, with an average decrease of 0.24% and the euro's parity against the US dollar even slightly increased.

Some analysts believe that because the situation of other heavily indebted countries in the eurozone and other euro zone countries in Italy and Spain has become stable, the European Central Bank has also established a de facto guarantee mechanism for bonds in various countries. The possibility of a ripple effect on Greece has been reduced. It is no longer as strong as two years ago to stimulate the entire eurozone's economic nerves.

But this sudden election storm is not good news for Greece. Originally, after more than four years of efforts, the Greek economy has improved. In the third quarter of this year, the economy grew by 1.7% compared with the same period last year, and the whole year is expected to grow by 0.6%. It is preparing to bid farewell to the 6 consecutive year of recession.

This time Greece The possibility of coming to power in the election is a radical leftist coalition party that will make the Greek economy turn around. The party became the main opposition party in the June 2012 general election. It strongly opposed the Greek government's agreement with the international creditors, and advocated stopping the repayment of Greek debt and renegotiating the relevant provisions of the Salvage Agreement. This is exactly the opposite of the position of the current government led by Premier Samaras.

After the debt crisis broke out, the European Union, the European Central Bank and the International Monetary Fund agreed to provide two rounds of bailout loans to the country for a total of 240 billion euros, in order to avoid Greece's disorderly debt default that might endanger the stability of the eurozone. Greece agreed to implement a series of reform and austerity measures based on pay cuts, layoffs, tax increases and privatization. These measures are reducing Greece's debt level, improving the government's financial position and increasing its financial position. Mobility At the same time, it also made the Greek economy decline year after year, the people's income decreased sharply, the unemployment rate exceeded 25%, and the economic and social costs were huge.

If there is no big change in the current pattern of public opinion, then the radical leftist coalition party will probably come to power. This will halt the reform process in Greece and the relationship between the country and the euro group will face severe challenges. At worst, it is not impossible for Greece to be kicked out of the eurozone.

On the other hand, the New Democratic Party led by Samaras is not without opportunities. Although the Greek people are dissatisfied with austerity and reform measures, most Greeks do not want to hold parliamentary elections. Moreover, the radical left wing alliance led by only about three percentage points. rate of support It is far from high enough to be in office alone. If the New Democratic Party wins the election in a general election, the political and economic situation in Greece will stabilize after a period of turbulence, and it is expected to gradually restore economic growth in the framework of the euro area.

EU Economic Affairs Commissioner Moss, 29, warned that any attempt to stop debt repayment in Greece would be "suicide". He also said that supporting an anti EU and anti compact party would hamper Greece's economic recovery process. German finance minister Schauble said that the Greek general election will not change any agreement signed by creditors and any new government must fulfil its predecessor's treaty obligations. From these statements, creditors, especially the euro group, will pay close attention to the economic impact of the Greek general election.