The centre-right New Democracy (ND), led by Antonis Samaras, is the senior partner in a fragile two-party coalition with the centre-left Panhellenic Socialist Movement (Pasok). The coalition broadly supports the country's fiscal austerity agenda accompanying the two bail-outs (worth a total of €24obn) that Greece has agreed with its international creditors in the EU and IMF. The next legislative election is scheduled for 2016. However, The Economist Intelligence Unit believes that an early election will take place, probably in 2015, possibly triggered by failure by members of parliament (MPs) to choose a president, under a highly complex electoral system. The left-wing Syriza Unifying Social Front (Syriza) could possibly emerge as the strongest party at a snap general election, but ND would still be likely to lead the next government because of Syriza's lack of obvious coalition partners.
After six years of economic depression, Greece is set to return to modest growth this year. We forecast real GDP growth of 0.4% in 2014. In 2014-15 growth will be boosted by strong export performance, but the external sector's positive contribution to GDP growth will dwindle over the forecast period as domestic demand recovers thanks to returning business and consumer confidence, strengthening growth from 2015. A disorderly debt default and Greece's exit from the euro remain downside risks to this forecast.
We expect a number of fundamental imbalances in the Greek economy to be addressed in 2014-18, but delay in doing this would hinder growth over the rest of our long-term forecast period. In the latter half of the long-term forecast period, growth will be held back by a marked deterioration in the demographic profile and therefore diminishing opportunities for greater labour utilisation. Projected growth will not be enough to prevent Greece from losing ground to the economies of eastern and central Europe in terms of GDP per head. An exit from the euro area would cause severe pain in the short term but might boost medium- to long-term competitiveness.

ML 5

ML 6

Greece-highlights 7

Political outlook 7

Demographic outlook 7

Business environment outlook 7

Economic outlook 8

Market opportunities 8

Long-term outlook 8

Fact sheet 9

Political outlook 10

Political forces at a glance 10

Political stability 10

Political and institutional effectiveness 11

Election watch 12

Key players to watch 12

International relations 13

Demographic assumptions 14

Business environment outlook 16

Greece's business environment at a glance 17

Macroeconomic environment 17

Policy towards private enterprise and competition 18

Policy towards foreign investment 19

Foreign trade and exchange controls 20

Taxes 21

Financing 22

The labour market 23

Infrastructure 24

Economic forecast 26

Policy trends 26

Fiscal policy 26

Monetary policy 27

International assumptions 28

Economic growth 28

Sectoral trends 30

Inflation 31

Exchange rates 31

External sector 31

Foreign direct investment in Greece 32

Market opportunities 34

Market outlook 34

Long-term outlook 37

The long-term outlook 37

Methodology for long-term forecasts 40

Data summary 42

Data sources and definitions 47

Guide to the business rankings model 48

Indicator scores in the business rankings model 49

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