GIG Economic Bulletin – 5 July 2021

Analysts and authorities continue to upgrade their short and medium-term growth forecasts for Greece, as manufacturing PMI showed record growth and retail sales rebounded from the lockdown. The spread of the Delta variant in Europe is trimming the baseline expectations for tourism this summer.

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The Bank of Greece increased its GDP growth forecast for Greece to 5.3% for 2022, while it predicts average yearly growth of 3.5% over the next decade. The government is preparing a tender for the management of properties under its new insolvency regime; energy group Hellenic Petroleum unveiled a €4 billion investment plan; and Greece tops ranks as best destination for superyacht charters in 2021.


The latest monetary policy report from the Bank of Greece (BoG) sees growth averaging 3.5% annually in the coming decade, with the Recovery and Resilience Facility (RRF) adding 6.9% cumulatively until 2026 in the baseline scenario, and 8.5% in the more optimistic scenario. The BoG’s GDP growth forecast for 2021 is virtually unchanged at 4.2%, while for 2022 it has been revised upwards from 4.8% to 5.3%.

Investment analysts at UniCredit and HSBC have upped their 2021 growth forecasts for Greece to 4.5% and 5.5%, respectively, driven by the expected impact of the RRF, better-than-expected Q1 growth, and progress on vaccinations.

The Finance Ministry is looking at keeping in place some of the tax cuts introduced during the pandemic, including freezing the solidarity surcharge for all employees, keeping corporate tax at 22%, and permanently reducing the tax advance to 80%. The total package would have a fiscal impact of €2 billion, leading to a 1-percentage-point reduction in the primary surplus estimates published in the Medium-Term Fiscal Strategy.

The lockdown easing appears to have slowed down the growth of bank deposits in May. Private sector deposits increased by just €363 million to €168.11 billion. Household deposits rose by €37 million to €130 billion.

Retail sales jumped by 38.9% Y-o-Y in April according to the index produced by the Hellenic Statistical Authority (ELSTAT), following a revised drop of -2.9% in March. The biggest rises were seen in furniture, electrical, and household equipment, while sales of automotive fuel and pharmaceuticals were also up.

Manufacturing PMI continued to rise, reaching 58.6 points in June from 58 points in May, the strongest growth rate recorded since April 2000. The rise was supported by an increase in orders thanks to strong demand from domestic and international customers, according to index compilers Markit, while rising prices and supply chain disruptions also played a part.

Economic sentiment remained stable in June at 108.7 points on the European Commission’s index, while employment expectations rose marginally to 112 points, from 110.9 in May. However, consumer confidence dropped 3.4 points, after rising 7.6 points to -22.2 in May.

Unemployment rose to 17.1% in Q1, an increase of almost one percentage point on a quarterly and an annual basis. The number of unemployed remained virtually unchanged Y-o-Y, however the number of employed shrunk by 5.9% on an annual basis, and the size of the inactive population of working age grew at the same rate reflecting the effects of the furlough scheme.

Real Estate

The government will be inviting tenders for the contract to manage the state body that will purchase and lease back the properties of vulnerable households under the new insolvency regime. The size of the investment required is estimated to be in the region of €2 billion, while the terms of the tender require a 10-year track record of managing property portfolios.


HELPE has launched its strategic plan dubbed “VISION 2025”, which includes €4 billion of investments, half of which will be in renewables. The plan, which marks a shift from the group’s activities in the petroleum sector, will also halve its CO2 emissions by 2030.

As part of “Vision 2025”, Hellenic Petroleum plans to invest €1.7 billion in RES. Copyright: Richard Whitcombe/ Shutterstock

PPC is planning to issue another 7-year sustainable bond linked to the company’s CO2 emissions, with the aim of raising €300 million. The move will follow the successful issue of €775 million in sustainable bonds already this year by Greece’s largest electricity generator.


Slow arrivals and growing hurdles to travel have led the tourism industry to trim its revenue forecasts for the current year to 35-40% of 2019 revenues. This is in line with the BoG’s monetary policy report which sees the sector bringing in just over €7 billion in revenues, or 39% of what the sector generated in 2019.

Greece climbed two positions in the last two years to become the top destination for superyacht charters in 2021, capturing 23% of the market. This was accompanied by a 15% rise in the number of superyachts chartered out of Greece. Bloomberg reports that there were 194 superyachts in Greek waters at the end of June, compared to 171 in Italy and 170 in the U.S.


Alpha Bank’s share capital raise was oversubscribed almost two-fold (1.7), fetching €1.37 billion in orders, while the share price settled at €1. All major shareholders participated, while the HFSF saw its stake reduce from 10.9% to 9%.

Stock Market

The ASE general index dropped -2.33% on a weekly basis to close at 886.66 points after another week of slow trading, as concerns over the impact of the Delta variant on tourism made investors cautious. June closed with monthly losses of -1.12%, however the index is still up 9.38% in the year to date.

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