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Greece: Election Result Signals Policy Continuity

The New Democracy Party (ND), led by Prime Minister Kyriakos Mitsotakis, won 146 out of 300 seats in Greece's general election. This is five seats short of an overall majority. With almost all the votes counted, New Democracy won 40.8% (146 seats), Syriza 20.1% (71 seats), PASOK 11.5% (41 seats), the Communist Party of Greece (KKE) 7.2% (26 seats) and the Greek Solution (EL) 4.5% (16 seats). ND is now seeking another election that this time will use a form of bonus system, that could enable ND to win an overall majority. PM Mitsotakis has returned the mandate to form a government, and the leaders of the second and third largest parties are expected to do the same. At the moment, June 25th 2023 seems the most likely date for the second election.

If New Democracy manages to keep its share of votes, combined with the same high share of parties not reaching the 3% threshold, the outcome of a second election could result in a strong outright majority for ND. This will bring another period of political stability for Greece. ND's potential win would give it a mandate to continue with the implementation of reforms and investments, increasing Greece's growth prospects. Improved growth prospects from the expected €30.5bn Recovery and Resilience Fund (RRF) expenditures for reforms and investments, is a contributing factor to potential credit improvements in DBRS Morningstar's rating for the Hellenic Republic of BB (high) with a Stable trend.

-- The election result gives a significant lead to the incumbent New Democracy Party (ND).
-- ND's potential achievement of an outright majority in an expected second election in the weeks ahead would bring political stability and give government a mandate to continue with the implementation of reforms.
-- We view reforms and investments that increase Greece's growth prospects as strong contributing factors to Greece's credit rating.

“Greece's election result signals policy continuity and a continued reform path that could raise economic growth,” says Nichola James, Co-Head of Global Sovereign Ratings. “Despite persistent global economic challenges, investment growth in Greece could even exceed expectations this year”.