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The Euro got another boost yesterday as the austerity program the Greek government announced in order to begin reducing its huge deficit got a seal of approval by ratings agency Standard & Poor’s.
Naturally, this eases pressure on the entire Eurozone and also makes it easier for Greece to loan more money in much more favorable terms than otherwise. It is hoped that this will help the ailing economy to heal itself faster.
But a close scrutiny of Standard & Poor’s report shows that there is still doubt as to Greece’s true capability to rise out of this crisis in the near future.
S&P predicts “much weaker medium-term growth than official forecasts” and an erosion of the tax base. So this positive report is lukewarm at best.
It seems that the Greek problem is scary enough to make financial institutions such as S&P wish to not add fuel to the fire, but it still so fragile that no company wants to be portrayed as fools if the Greek economy continues to weaken.
One should note the extent of political unrest the austerity program caused in Greece, a country known for its generous wage packages and government spending.
The future for Greece is yet uncertain, but for the moment, it has brightened quite a bit. Good news for the Euro.
