Political risk slowing foreign investment in Greece: think tank

ATHENS Tue Oct 21, 2014 

(Reuters) - Political uncertainty is slowing foreign investment in Greece, the country's most influential think tank warned on Tuesday, endangering a fragile economic recovery.
Fears of a snap election and the government's plan to exit early from a bailout triggered a sell-off in Greek bonds last week, pushing the yield on 10-year government paper above 9 percent and pricing it out of international capital markets.

A presidential vote in February or March is seen as a likely trigger for early elections next year as Greece's coalition government does not have the backing of 180 lawmakers needed to push through its nominee for head of state.
Under Greek law, parliament must be dissolved if it fails to elect a president. Greece's main opposition, the anti-bailout Syriza party, which leads in opinion polls, has said it will not back any candidate put forward by the ruling coalition.

"Part of the electoral cycle uncertainty (after the European parliament elections in May) remains, continuing to dampen investment ventures from a portion of foreign investors," the think tank, IOBE, said in a report.
IOBE expects the economy to pull out of a six-year recession and expand by 0.7 percent this year, sticking to a previous forecast in July, and still sees unemployment averaging 26.7 percent.
The think tank's projections are broadly in line with estimates by the country's European Union and International Monetary Fund lenders, who expect the 183-billion euro ($233 billion) economy to grow by 0.6 percent this year.

IOBE also expects deflation to slow slightly to 0.8 percent from 0.9 percent last year.
Tourism, a major currency earner for Greece, will continue to be a main recovery driver, the think tank said, a forecast supported by balance of payments data released by the central bank on Tuesday.
The Bank of Greece said the country's current account surplus widened in August compared to the same month last year, boosted by higher tourism receipts. Tourism revenue grew 10 percent to 3.18 billion euros.
After meeting Prime Minister Antonis Samaras in Athens, the chief executive of British tour operator TUI Travel said on Tuesday that visitors to Greece rose 10 percent this year and the company aimed at a same-level increase in 2015.