Germany is the official guest country at the 2024 Thessaloniki International Fair this weekend. It’s a major change from a few years back when the two countries were at loggerheads during Greece’s sovereign debt crisis.

Introduction: A New Era of Greek-German Relations

Germany is the official guest country at the 2024 Thessaloniki International Fair, marking a significant shift in Greek-German relations. Just a decade ago, Greece and Germany were embroiled in conflict during Greece’s sovereign debt crisis. The transformation from financial discord to economic partnership highlights a remarkable turnaround.

The Debt Crisis Era: From “Grexit” to Economic Recovery

• The Crisis Years (2014-2015): During Greece’s sovereign debt crisis, discussions of “Grexit” — Greece’s potential exit from the eurozone — were rampant. Greece faced severe economic hardships, including bank nationalisations and widespread business closures.

• Austerity Measures: Many Greeks viewed the austerity measures, largely influenced by Berlin, as draconian. These policies led to a dramatic decrease in income, with many losing up to 40% of their earnings.

Economic Turnaround: Greece’s Resurgence

• Strong Growth Outlook: Fast forward to 2024, Greece is now one of Europe’s fastest-growing economies. The nation expects a 2% growth in GDP this year, a testament to its remarkable economic recovery.

• Budget Surplus: Greece has managed to maintain a high primary budget surplus, meaning it is spending less than it earns. This fiscal discipline allows Greece to refinance its debt at historically low interest rates.

• Debt-to-GDP Ratio: Despite improvements, Greece’s debt-to-GDP ratio is projected to be just under 159% in 2024. This remains higher than before the crisis due to the severe economic contraction during the downturn.

Sustaining Growth: The Role of Primary Budget Surplus

• Importance of Surplus: Panagiotis Petrakis, Professor Emeritus of Economics at the University of Athens, emphasises the importance of maintaining a primary budget surplus. This strategy is crucial for reducing the debt ratio over time.

• Future Goals: Finance Minister Kostis Hatzidakis aims to “positively surprise” markets by reducing the debt-to-GDP ratio to below 120% by 2027, showcasing ambitious financial management.

German Investments Fueling Greek Renewal

• Fraport Greece Investment: German investment has played a pivotal role in Greece’s economic revival. In 2017, Fraport Greece, a subsidiary of German airport operator Fraport AG, acquired concessions for 14 regional airports, including those in Thessaloniki, Mykonos, and Rhodes.

• Modernisation Success: Fraport invested €1.24 billion in these airports, with more than €400 million allocated to their modernisation. This investment has revitalised these airports, boosting Greece’s tourism sector.

Criticism and Economic Benefits

• Opposition to Foreign Investment: Despite the success, there was significant opposition, particularly from left-wing circles, accusing the government of “selling off public property.” However, economic expert Petrakis argues that such investments within the EU are beneficial and necessary.

• Local Impact: The influx of tourists and business growth resulting from the modernised airports has greatly benefited local economies, proving the success of German investments.

Germany as Greece’s Key Economic Partner

• Trade Relations: Germany has emerged as Greece’s most important economic partner, with a strong demand for Greek exports and vice versa. German products remain highly sought after in Greece.

• Investment Opportunities: Greece’s strategic location and growing economy make it an attractive destination for further German investments, particularly in sectors like energy and transport.

Focus on Sustainable Growth: Future Prospects

• Need for More Investment: To ensure sustained growth and tackle inflation and energy costs, Greece requires additional investment. Foreign investment, including from Germany, is crucial for this.

• Example of Alexandroupoli: The port of Alexandroupoli in northeastern Greece, with its strategic position in energy pipelines, is highlighted as a prime investment opportunity. Its importance is expected to increase amidst geopolitical tensions in Eastern Europe.

Conclusion: A New Chapter in Greek-German Relations

The evolution from a period of economic discord to one of mutual economic benefit underscores a significant shift in Greek-German relations. As Greece continues to recover and grow, the partnership with Germany will be pivotal in ensuring long-term economic stability and prosperity.

Useful Links for Further Reading:

• Thessaloniki International Fair 2024: Find out more about the fair and Germany’s role as the guest country.
• Greece’s Economic Recovery: Explore Greece’s economic progress and future prospects.
• Fraport Greece Investment: Learn more about the modernisation of Greek airports by Fraport.
• EU Debt Management Strategies: Understand how EU countries manage debt and fiscal policies.
• Investment Opportunities in Greece: Discover potential investment areas in Greece, including energy and transport sectors.