According to voter returns, the conservative Nea Dimokratia has emerged the strongest with around 30 percent. Together with the socialist Pasok (12 percent) this means a majority in Greece's parliament which is in favor of reform and deficit reduction.
Allianz position on Greek elections
However, given the deep recession and resulting budget shortfalls, future developments remain uncertain. The fact that the radical left coalition Syriza could get 27 percent of votes and form the second-largest faction in parliament shows that Greek voters still remain split.
We are not expecting possible renegotiations to lead to fundamental changes with regard to budget and reform targets already agreed with the EU, but Greece should be given a bit more time to reach these targets. That said, this flexibility needs to come in exchange for Greece's unconditional cooperation with the EU.
What is most important is that structural reforms in Greece are implemented quickly in order to encourage more growth in the mid term. For the short term, Greece needs to be given a hand with a growth initiative, a kind of Marshall Plan.
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