By Sarah Sjolin, MarketWatch
After a convincing victory in Greece’s general election on Sunday, leftwing leader Alexis Tsipras is poised to put the debt-laden country back on a stable recovery path and secure the nation’s future in the eurozone, analysts said.
Tsipras’s Syriza party claimed more than 35% of the votes in the election — the third vote in nine months — easily beating conservative opposition party New Democracy.
The 41-year old leader had won elections in January after promising to roll back tough austerity measures demanded by Greece’s international lenders and renegotiate the bailout terms. However, Tsipras was forced to accept even stricter bailout conditions in July after a nerve-wrecking few weeks, when the country was at the brink of bankruptcy and a so-called Grexit, shorthand for Greece leaving the eurozone.
The decision to back the controversial bailout fueled internal turmoil in Syriza, pushing Tsipras to resign from his post as prime minister in August and call snap elections.
Now, with renewed support from the population, Tsipras has been given a fresh mandate to push through with tough reforms demanded by creditors. The coming months are likely to mark a new period of stability in Greece, analysts said.
Here are some of the initial reactions:
“While the victory ensures more years of painful austerity for the Greeks, it also brings back some welcome certainty and stability which is going to be extremely important for the country going forward. Grexit risks have now diminished and the Greeks have made their position perfectly clear. [T]hey want to remain in the euro, even if it means more pain in the short term.” — Craig Erlam, senior market analyst at Oanda
“Overall, we believe [Sunday’s] election result is generally positive. First, although it appears to have failed to win an absolute majority, Syriza received a significant mandate from the population — more so than indicated in any of the recent polls — despite its recent policy U-turn. Therefore, in our view, it has a clear mandate to implement the third bailout.” — Economists at Barclays
“The Greek electorate’s third trip to the polls in nine months has seen PM Tsipras’ Syriza coalition embraced … despite having reneged on promises, given up much ground on a third bailout and taking the nation to the brink of a euro-exit. This should at least provide some stability in terms of keeping to the terms of the bailout before the first progress review.” — Mike van Dulken, head of research at Accendo Markets
“Alexis Tsipras’s gamble has paid off. Given the scale of the turmoil he had caused in Greece and the dramatic nature of his policy U-turn in July from an anti-troika to a pro-troika stance, his victory at the snap elections [Sunday] is remarkable … For markets, the Greek election result has a number of positive features. After years of almost unprecedented crisis, the vast majority of Greeks has once again endorsed parties that are promising to keep the country in the euro even if that implies thorough and painful reforms.” — Holger Schmieding, chief economist at Berenberg
“In the wider picture, it’s not going to make life any easier for the likes of the EU, IMF and ECB and the negotiations surrounding debt sustainability over the coming months. It will also, at the margins, galvanize support for the anti-austerity movements elsewhere in Europe, especially in Spain and Italy. The next review happens towards the end of next month, when creditors will assess the progress on reforms, especially in relation to pensions.” — Simon Smith, chief economist at FxPro
“[Deutsche Bank’s] resident Greek expert George Saravelos notes that the election outcome … represents a reaffirmation of the prior political status quo with one key difference: a strong political endorsement of Tsipras’ decision to compromise with European creditors and maintain Greece’s Eurozone membership. George notes that with the Syriza parliamentary group now consisting of more moderate MP’s and the vast majority of opposition parties also in support of European compromise, the election is now likely to mark a period of political stability in Greece.” — Deutsche Bank analysts
