The Greek economy is outpacing growth and experiencing lower inflation than the Eurozone, but the country is preparing for elections on May 21, explains the American house of Goldman Sachs.

Although opinion polls show a clear lead for New Democracy and Prime Minister Mitsotakis, it is unlikely that the first party will be able to secure a parliamentary majority. Therefore, it is most likely that either a coalition government will be formed between ND and PASOK, or that new elections will be called for the beginning of July, utilizing the new electoral system that provides bonus seats to the largest parties. ND may be motivated to push for the July vote in order to achieve a one-party majority or, at the very least, greater strength in the new governing coalition, the bank explains.

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The outcome of the election will be important in accelerating the implementation of the RRF and ensuring long-term growth through capital accumulation. A convincing delivery of the RRF to promote and facilitate the structural transformation of the economy will likely be the final step for Greek government bonds to regain an investment grade rating.