GIG Economic Bulletin – 4 October 2021

As the latest growth forecasts continue to upgrade expectations for 2021, several major international investment groups are expressing interest in the upcoming €750-million capital raise by PPC. Greece has signed a strategic defence pact with France, agreeing to the purchase of warships for €2.9 billion.

Economic BulletinInsights
International analysts and banks continue to increase their growth forecasts for the Greek economy, while there are strong signals of inflation due to spikes in prices of energy and metals. Meanwhile, Greece and France have signed a major €2.9bn defence deal, and a number of international investment funds have already endorsed power company PPC’s upcoming €750m capital increase.


The latest forecast by Fitch Solutions sees growth at 6.3% this year and 4.3% in 2022. Citigroup has also revised its 2021 growth estimate from 5.3% to 8.3%. Moody’s, Scope Ratings, Capital, and Oxford Economics have also placed Greek growth at 8%.

Bank of Greece (BoG) governor Yiannis Stournaras expects the Greek economy to grow at an average rate of 3.5% over the next decade, while he believes that Greek debt will achieve investment grade by the end of 2022. Stournaras has also said that he is confident the ECB will continue to support Greek borrowing costs after the end of the pandemic emergency purchase programme (PEPP), thanks to a combination of strong growth and reforms.

The draft budget due to be submitted to parliament in the coming week includes a growth forecast of 5% for 2022, which is reduced from the 6.2% included in the Medium Term Fiscal Strategy (MTFS) to account for stronger growth in 2021. Nominal GDP is expected to be €186 billion in 2022, up from €184.6 billion in the MTFS.

Youth unemployment rose to 38.2% in Q2, from 36% in the same period last year. Greece’s rate is twice the EU average of 18.9% and has continued to rise despite the fall in the overall unemployment rate.

Retail sales rose by 13.3% Y-o-Y in July according to figures from ELSTAT, extending the growth spurt which began in April. Pharmaceuticals and cosmetics led with 23.9% growth, followed by clothing and footwear with 21.5%, and automotive fuel with 19.6%.

August saw a negative hirings balance for the first time this year. While the tourism season normally produces a positive balance for the month, the tapering of pandemic support measures led to net layoffs of 9,875, with catering being the most affected sector.

Credit growth to the private sector slowed to 0.8% in August according to the BoG, marking a low point for 2021. Private sector bank deposits rose by €1.48 billion, with growth exceeding €10 billion in the year to date.

Economic sentiment dropped from 113 to 109.7 in September, while consumer confidence also declined for the fourth month in a row, from -35.1 to -38.3, according to the European Commission’s indices.

Strong inflationary signals are coming from ELSTAT’s producer price index due to hikes in fuels, electricity, natural gas, and metals. The index was up by 13.1% Y-o-Y in August, compared to drops of -6.6% in the same months of 2019 and 2020. Most analysts expect a difficult winter as the price hikes that started in March will filter through to retail prices from September.


Greece has signed a historic bilateral strategic defence pact with France which includes defence purchases worth €2.9 billion for the Hellenic Navy. Greece will be acquiring three frigates from the Naval Group, with the option of a fourth, while discussions are underway for the participation of Greek companies in their construction.


The upcoming €750-million capital raise by PPC is on the radar of several major international investment funds. Funds that participated in PPC’s recent bond issues include BlackRock, Fidelity, EBRD and Apollo, while the recent announcement was endorsed by BlackRock, Fidelity, Apollo, Bluecrest, Pictet, and KKR, among others.

Share trading in advance of the PPC capital raise announcement is being investigated by the Capital Markets Commission in response to suspicions of insider trading. PPC’s share price dropped in the days prior to the announcement despite the successful sale of PPC subsidiary HEDNO.

Greece is soon to unveil the regulatory framework for offshore wind power. According to Environment and Energy Minister Kostas Skrekas, the goal is to develop 1.5 GW of offshore wind power by 2030. Several domestic and international companies are already preparing projects in this segment of the RES market.

Offshore wind farm. Copyright: TebNad /

The government is adding another €50 million to the €150-million fund created to cushion the impact of energy price rises on customer bills. Another approximately €80 million will be spent on subsidising natural gas costs, which have risen almost fivefold over recent weeks.

Real Estate

Inflation is affecting the cost of building materials, with ELSTAT reporting a 16.4% annual rise in the price of copper pipes and a 20.6% increase in fuel prices. Construction costs are estimated by the industry to have risen by 40%.

Mortgage lending by Greece’s four systemic banks has risen by 50% in 2021 compared to 2020 to a total of €850-900 million. The figure is 160% above the low of 2017, but just 10% of the pre-crisis high of 2007.

Stock Market

The ASE general index closed Friday at 871.06 points, reflecting marginal weekly losses of -0.23%. September closed with monthly losses of -6.3%, however the first day of trading in October brought a slight uptick of 0.66%. Despite continuing global downward pressures on equities, the Greek market is showing signs of stabilising thanks to positive H1 corporate results.

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