GIG Economic Bulletin –23 August 2021

With summer tourism meeting the most optimistic projections, manufacturing turnover rising above pre-pandemic levels, and a range of other indicators pointing in the right direction, the government prepares to revise its growth forecast up to 4%.

Economic BulletinInsights
The strong performance of Greece’s tourism sector, a rebound in manufacturing turnover, and improved indicators across sectors is prompting the Greek government to up its growth forecast for 2021 to 4%. Meanwhile, Greece’s F&B exports have showed the highest growth rate in the EU in 2020.

Macro

The Finance Ministry is preparing to up its growth estimate for the year to 4%, from its earlier forecast of 3.6%. The move is prompted by positive reports on tourism, as well as strong moves across a range of economic indicators.

Sales across all sectors reached €78.38 billion in Q2, up from €60.57 billion in the same period in 2020, but still lagging the €80.02 billion achieved in Q2 2019. Revenues in many sectors still fall short of pre-pandemic levels due to ongoing restrictions, however manufacturing sales rose to €17.97 billion, compared to €16.72 billion prior to the pandemic.

Industrial turnover rose 22.4% Y-o-Y in June, according to the Hellenic Statistical Authority (ELSTAT). The move follows a 37.6% increase in May, continuing the rebound which started in March after 14 consecutive negative readings.

Industry confidence improved by 4.4 points in July to reach 7.4 according to the European Commission’s economic sentiment survey, giving the third consecutive positive reading. Industry confidence has improved by 17.4 points since the start of the year.

Unemployment dropped to 15% in June, compared to 17.8% in the same month last year, according to ELSTAT. The number of employed increased by 181,470 to a total of 3.98 million people. The number of unemployed declined 123,197 Y-o-Y to 700,990, while the inactive population fell to 3.18 million, a Y-o-Y decrease of 89,872.

The employment balance in July was positive, with 24,395 more hirings than departures, according to the Labour Ministry register, reflecting seasonal employment in the tourism sector.

Fiscal

The government will be issuing a revised budget to include €0.5 billion in support for the victims of recent wildfires. Since 2020, a total of €1.6 billion has been allocated from the budget to compensate for damage from natural disasters.

Central government debt increased by €6.53 billion in Q2 to reach a total of €387.3 billion, according to the Ministry of Finance debt bulletin. The increase comes largely from €5.52 billion in bonds, while there was also a €339.5-million increase in T-bills.

Exports

Greek food and drink exports grew by 11% in 2020, the highest growth rate in the EU according to a Bank of Greece study. Preliminary figures show the same trend continuing in H1 2021.

Greece’s top agrifood exports include olive oil, cheese and olives. Copyright: beats1 / Shutterstock

Tourism

Greece managed to secure 40% of 2019 tourism revenues in the period comprised from the start of the year until the middle of August, putting the government’s target of 50% for the year well within reach. According to figures quoted by Finance Minister Christos Staikouras, domestic flights in the first 10 days of August were down just -20% compared to 2019, while international flights were down by -36.5%. In July the Civil Aviation Authority reported 2.8 million international visitor arrivals, 31% below 2019 levels but up 147% from last year.

Data from aviation consultants OAG shows that flight reservations to Greece in August have surpassed 2019 levels by 2%, while across Europe international bookings are 31% below 2019 levels.

Stock Market

The ASE general index closed at 883.11 points on Friday, with -1.37% weekly losses, led by the banking index which fell -3.88% in the week.

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