WOOD Flash – Greece macro: the new safe haven in the Eurozone

We spent some time in Athens recently, speaking with local policymakers and investors, and just observing how life is progressing in Greece these days. Our two most important takeaways from the trip are that the process of wage compression may be finding a trough; although, of course, the pick-up from here is likely to remain very mild, in our view. Equally important, we believe, is the realisation that the reform effort will continue even after the Troika programme is technically completed this summer, as supervision and conditionality will remain for many years ahead. This dynamic should help achieve a genuine and sizeable quality improvement in the judicial system, housing and land management, and public administration. In the near term, our assessment of the economy and of inflation has not changed materially post-trip, nor do we see much upside from EU funds absorption in the near term. That said, once the structural changes mentioned above come to a conclusion, by 2020E, and corporate balance sheets continue to restructure, the potential growth of the economy should be much higher than now, in our view.