GIG Economic Bulletin – 12 July 2021

More upgrades of Greece’s growth forecast underline the growing confidence in the country’s post-pandemic recovery. The relaxation of travel rules for visitors from England has revived the hopes of the tourism sector; however, the spread of the Delta variant across Europe is still seen as the determining factor in this summer’s takings.

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A new agreement between Greece and North Macedonia will allow the interconnection of both countries’ natural gas grids through the development of 123 km-long pipeline. Airlines register surge in holiday bookings to Greece after UK unveils changes in requirements for arrivals from “Amber List” countries. Meanwhile, the European Commission has upped its growth forecast for Greece to 4.3% in 2021.


The European Commission has updated its growth forecast for Greece to 4.3% in 2021, slightly up from its original estimate of 4.1%, while predicting 6% for 2022. The Commission notes that the relaxation of restrictions improved most sentiment indicators, adding that much of the export growth will hinge on the performance of tourism.

Think tank IOBE has bumped up its baseline growth scenario for 2021 to 5%-5.5% from its previous estimate of 3.5%-4%. Its modelling sees exports rising by 12%-15%, private consumption by 3.5%-5% and investments by 14%-17%. An adverse scenario where EU-wide tourism is hit by the pandemic could lower growth to 2.5%-3%.

Greece’s trade deficit widened by 43.9% Y-o-Y to €2.23 billion in May according to the latest release from the Hellenic Statistical Authority (ELSTAT). Imports rose by 48.5% to €5.3 billion, while exports increased by 51.1% to €3.07 billion. Over the first five months of the year, the trade deficit increased by 10.3% to €9.52 billion.

Industrial production rose a further 14% Y-o-Y in May, led by electricity supply, mining and manufacturing, after a 22% surge in April. On a monthly basis the index dropped by 4.1%, according to data from ELSTAT.

Greece’s Consumer Price Index (CPI) jumped by 1% Y-o-Y in June, following a marginal rise of 0.1% in May. The last two months mark a reversal from the 13 consecutive negative readings that preceded them, driven by global inflationary pressures on fuel and raw materials.

The first six months of the year saw 250,610 jobs created, compared to 43,394 jobs over the same period in 2020 and 296,466 in 2021, suggesting a strong recovery at the start of the tourist season.


The decision to lift quarantine requirements in England for double-vaccinated citizens returning from “amber list” destinations has reportedly resulted in a surge in travel bookings for Greece. Budget airline EasyJet reported a 400% increase in bookings to Corfu, while Jet2 has announced additions to its flight schedules to popular Greek holiday spots.

Air traffic in the first six months of 2021 reached 35-37% of 2021 levels nationwide. The 14 regional airports run by Fraport have reported traffic at 22.2% of 2019 levels, while traffic at Athens International Airport was down by -58.2% compared to 2019.

Only 7,000 out of 10,000 hotels have opened in July according to industry figures, with occupancy rates seen at 35%-40% on average.

The tourism sector has further trimmed its expectations for the year to 30-35% of 2019, which equates to takings of €6.35 billion.

Analysis from Morgan Stanley suggests that the Delta variant could shave 30% off hotel stays compared to initial estimates, possibly costing 1 percentage point of GDP growth for Greece. In an adverse scenario, a halving of hotel stays could lower growth by 2.3 percentage points.


Greece has signed a bilateral agreement with North Macedonia for the construction of a natural gas pipeline connecting the two countries. The pipeline, cost of which is estimated at €110 million, will extend 123 km from just north of Thessaloniki to Negotino, and will have a capacity of 1.5 bcm annually, with the possibility to upgrade to 3 bcm.

North Macedonia–Greece Interconnector Gas Pipeline. Copyright: Dmitriy Sudzerovskiy / Shutterstock

Real Estate

A study published by Piraeus Bank sees property prices increasing by an average 4.9% annually, regaining pre-crisis levels by 2027.

Rental prices in Athens and Thessaloniki rose by 10% in June according to the index which tracks asking prices.


Binding offers for the Egnatia highway are expected to open in July, while DEPA Infrastructure is also due to move to the binding offer stage by mid-month. The deadline for expressions of interest in the Port of Heraklion in Crete is set for July 30. Meanwhile, privatisation fund HRADF is expected to reveal its new privatisation and asset development programme in the coming weeks.

Greece’s largest shipyard, Skaramagkas, has sold to Greek shipowner George Prokopiou for €62.5 million, after three years under special administration.


Piraeus Financial Holdings, the parent company of Piraeus Bank, completed the securitisation of the Phoenix and Vega distressed debt portfolios with a total value of €7 billion. The mezzanine and junior tranches were transferred to debt servicer Intrum as part of the deal.

Alpha Bank’s new shareholdings following the €800 million capital raise include the HFSF with 9%, Paulson & Co with 5.6% and Schroders Plc with 5.5%. The public offer in Greece was allocated 19% of the new shares, 35% of which went to institutional investors and 65% to retail investors.

Debt servicers currently managing €90 billion worth of bad loans for banks, including their own portfolios and third parties, say they intend to cure 70% of them. Based on current GDP growth forecasts, servicers estimate that 60% of business loans and 70% of mortgages and consumer loans can be cured.

Stock Market

The ASE general index had another losing week, closing at 874.25 points, down -1.4% on a weekly basis. The index rebounded slightly on Friday, when news that Alpha Bank will be included in the MSCI Standard Index led to a 10% increase in the bank’s share price.

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