GIG Economic Bulletin – December 14, 2020

The global roll-out of Covid-19 vaccines by spring of 2021 offers hope of the return of tourism and a strong rebound for Greece, while the approval this week of the EU recovery package and the extension of the ECB’s PEPP programme further boost the country’s growth prospects.

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The prospect of the distribution of Covid-19 vaccines by early 2021 points to the revival of Greece’s tourism industry, and a recovery of the Greek economy, with international analysts forecasting GDP growth of 4.5% in 2021. In the meantime, the privatisation process of the Skaramangas shipyards has a winning bidder, while the BMW-Daimler urban mobility consortium has announced plans to establish a pan-European call centre in Greece.

Macro

Foreign analysts predict a strong post-Covid rebound for Greece, as the availability of vaccines is seen to boost the prospects for tourism in 2021. Rating agency Scope and research firm Capital Economics forecast next year’s economic growth at 4.5%, while Citigroup revised its forecast for 2020 to -7.7%, followed by growth of 2.2% in 2021, and 6.2% in 2022.

Greece’s trade deficit shrunk by 30% Y-o-Y in October according to the latest figures from the Hellenic Statistical Authority (ELSTAT). Imports dropped by 16.9% while exports fell at a slower rate of 7.9% compared to the same month last year. Over the first 10 months of the year, the trade deficit fell by 19.3% bringing the total shortfall to €15 billion.

GGBs

The European Central Bank (ECB) will be able to purchase an additional €10 billion worth of Greek government bonds up until March 2022 under the extension granted to the PEPP scheme, taking the total allowance up to €37 billion. As of November, the ECB has purchased €16.3 billion worth of Greek government debt.

The Public Debt Management Agency (PDMA) managed another record this year, by rolling over one-year T-bills with a negative rate of -0.26%. The auctioned amount was €625 million to pay off last year’s issue, which carried a rate of 0.07%.

Infrastructure

The Ministry of Infrastructure and Transport plans to launch projects totalling €13.6 billion over the next three years. The projects include road networks, railroads, and works against natural disasters. The prospect of renewed activity in the sector is attracting global players including names like Netherlands based Reggeborgh, as well as domestic construction firms such as Mytilineos and Avax.

Pyletech Shipyards, a member of the North Star group, has emerged as the leading bidder for the Skaramangas Shipyards, after submitting a €15.1 million bid. Pyletech’s submission includes €700 million worth of investments and the creation of 1,600 jobs over the coming years. The bid will be assessed by the administrator, before issuing a recommendation to the Finance Ministry.

Digital Governance Minister Kyriakos Pierrakakis recently launched Greece’s strategy for the transition to Digital Greece. Copyright: Aerial-motion / Shutterstock

Real estate

DoValue, one of the largest servicers of loans acquired from Greek banks, has kicked off the process through which some of its property portfolio is being made available via an online platform. Funds have taken on €60 billion euros of loans, with more than 500,000 properties as collateral, many of which are expected to be put on the market over the coming months.

Construction activity showed further signs of resilience to the pandemic, with new building permits up 29% Y-o-Y in September according to ELSTAT. An increase of 15.5% was recorded in the period comprised between January-September 2020 compared to one year ago.

Investments

Following the acquisition of ride-hailing app Beat (formerly Taxibeat), Free Now, the BMW-Daimler urban mobility consortium, is planning to boost its presence in Greece with the establishment of a pan-European call centre.

Banks

The Finance Ministry and the four systemic banks are in talks to develop systemic solutions that will continue to protect vulnerable borrowers while not damaging the payments culture. Options include an extension of the “Bridge” subsidy programme in combination with loan moratoria, as well as an improved version of the state-backed “Hercules” securitisation programme to speed up the reduction of banks’ non-performing loan portfolios.

The board of Piraeus Bank gave the green light for the proposed “hive-down” which will see the business split into a bank and a holding company. The restructuring will remove the losses derived from the €7 billion Phoenix and Vega securitisations from the bank’s balance sheet, removing the requirement for a recapitalisation.

Stock market

The November rally ran out of steam with the ASE general index recording a marginal loss of -0.76% on a weekly basis, to close at 779.04 points with increased volatility noted in the banking sector despite last-minute gains.

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