Morgan Stanley: Greece will have the best performance in the Eurozone

Morgan Stanley maintains a "constructive" stance on the Greek economy, expecting a further drop in GGBs and an outperformance of Greek shares compared to the rest of Europe. At the same time, Morgan Stanley is proceeding to upgrade the targets for the shares and the profitability of Greek banks.

In more detail, Morgan Stanley expects that despite global adversities the Greek economy will outperform this year. Higher prices will put pressure on consumers in the winter, but good fiscal health will partially offset the losses. At the same time, the economy will benefit from the National Recovery and Resilience Plan.

In the medium term, Morgan Stanley is adopting a "constructive" stance on Greece, which it largely links to the execution of investments and the implementation of reforms within the framework of the Recovery Plan. He expects a significant slowdown in GDP growth in 2023, but believes Greece can avoid recession and outperform the rest of the eurozone.

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As concerns Greek banks, Morgan Stanley notes their strengths include the consolidation of their balance sheets, the increase in loans due to the recovery in investment, and the increase in net interest income due to the rate hikes by the ECB.

Morgan Stanley places particular emphasis on the boost from tourism in 2022. "We believe that the normalization of tourism activity will be one of the main drivers for strengthening growth this year in Greece," it notes, although it points out that the recession in the rest of the eurozone - the base scenario for 2023 - will cause a possible slowdown in tourism activity in 2023. A compensating factor is the fact that 40% of tourist flows to Greece come from...