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Greek Current Account Deficit Narrows

James Boston
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www.finances.com
Greek Current Account Deficit Narrows

The Bank of Greece has announced the country’s Current Account balance for the month of May. This figure is now recording a deficit of -€0.246Bn, this compares favourably to the April reading of -€1.167Bn.

There are some signs of growth stability returning to the periphery countries of the Eurozone. The bail out set of Ireland, Greece and Portugal are all positioned to record positive economic growth both this year and next. Greek GDP is now predicted to grow at around 0.3% in 2014 and up to 1.7% growth is likely in 2015. This compares to Portugal’s growth prediction of 1.0% this year and 1.5% next year. Ireland is leading the post bail out countries with a growth prediction of 1.8% for this year.

Whereas Ireland has proven to have little problem in issuing sovereign debt, Portugal recently pulled a bond auction at the last minute due to the adverse conditions created by a problem at one of it’s major banking groups, Portuguese 10yr Bond yields are now trading above 4%. Earlier this month Greece completed it’s second bond auction since returning to the markets, this was deemed a moderate success as €1.5Bn was issued at 3.5%, the target was for twice this amount at a rate closer to 3.0% but geopolitical instability on the day of the auction kept many bidders away.

The likely probability of quantitative easing by the European Central Bank is no doubt aiding these periphery countries in their bond issuance programs, as it is for countries right across the Eurozone. It is however becoming evident that the window of opportunity to raise cheap sovereign funds is coming to an end, markets still exist for Eurozone related debt issues but the yields have been slowly rising over the past few month’s as investors realize that the low rates do not adequately compensate for the risk.

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