ATHENS: S&P said the Greek economy had shrunk by 1% in six months, despite the twin benefits of a lower oil price and a weak euro. Since the end of November 2014, Greek banks have lost about 14% of their deposit base to customer withdrawals and deposit outflows have continued.
“Greece’s solvency hinges increasingly on favorable business, financial, and economic conditions in our view, these conditions have worsened.”Without deep economic reform or further relief, we expect Greece’s debt and other financial commitments will be unsustainable.”
It added that government finances, which appeared to be improving slightly last year, had now been dented by weaker economic activity and rising arrears on taxes. The conditions have been made worse by the uncertainty over the negotiations between Athens and its main creditors – the IMF, the European Commission and the European Central Bank.
S&P said that economic prospects could deteriorate further unless Greece reached a deal over the next €7.2bn tranche of its bailout loan.
