GIG weekly bulletin – September 21

Despite losing revenues due to the pandemic many Greek businesses say they have used the lockdown period to evolve and innovate, while investor confidence returns to Greek equities and continues to drive down the yields on government bonds.

United Against Covid-19Economic BulletinInsights
As the government adapts its forecasts for an -8% GDP contraction in 2020, ongoing investor confidence in the Hellenic market is reflected by historic low yields on 5-year bonds. Studies reveal that Greek businesses have responded to coronavirus-induced challenges through diversification and digitisation, while Prime Minster Mitsotakis underlines that the administration’s priorities moving forward lie in the attraction of green and digital investments, economic transformation, job creation, and infrastructure development.


Greece’s primary deficit as of August reached €6.6 billion, which puts it on track to end the year at €10 billion, or 6.6% GDP. Expenditure exceeded initial estimates by €5 billion euros, and revenues undershot the original target by €3.63 billion. The government has now adjusted its expectations to reflect the adverse scenario of a -8% recession and a 6% GDP primary deficit for 2020, aiming for a zero-primary deficit in 2021 and a return to surpluses as of 2022.


The pandemic resulted in lost revenues of €20 billion in the second quarter of 2020, according to data released by the Hellenic Statistical Authority (ELSTAT). Wholesale and retail lost €6 billion in sales in that period, with the combined revenue reaching €25.5 billion, a drop approaching -19%. Manufacturing lost €3.6 billion in sales, a decline of -21.6%, while hotels and restaurants lost €2.6 billion in sales, a drop of just under -79%. Analysts at the National Bank of Greece estimate the loss of business for the whole of 2020 to reach €50 billion, a drop of -19%, under the assumption that the pandemic will be kept under control, leading to a GDP drop of -7.5%.


Greek government bonds (GGBs) continue to hit record-low yields, reflecting the attractiveness of Greek debt in the international markets. The 5-year GGB had a historic low of 0.217% during the past week, with the spread down to 155 basis points, having dropped by 300 points in the last six months. Volumes in the secondary markets are increasing, with €9.8 billion worth of transactions year-to-date, up from €8.5 billion last year and €5 billion in 2018.


Prime Minister Kyriakos Mitsotakis kicked off the 15th annual Greek Roadshow with an invitation to invest in the future of Greece. The Greek Premier underlined that the priorities of the government's national development plan are: "Green, digital, and private investments, and economic transformation, employment, skills and infrastructure," while expressing his confidence that global capital and talent will be attracted to Greece by the country’s competent handling of the pandemic. The roadshow will see over 700 virtual meetings between 34 listed companies and over 150 analysts.

Six out of ten businesses polled by the German-Greek Chamber of Commerce have used the pandemic crisis as an opportunity, by adjusting their business models, launching more products and services, and creating new business relationships. 40% of businesses implemented remote working, and 22% moved more of their processes online. The majority did not reduce headcount in response to the pandemic.

COVID-19 package

Prime Minister Mitsotakis’ announcements at the Thessaloniki Helexpo Forum amount to €6.8 billion of additional measures to support businesses and households hit by the pandemic. The “self-confidence” package will include temporary reductions to social security contributions, incentives for the creation of 100,000 private sector jobs, and extended tax relief. Key reforms to the labour market, justice, and pensions will be brought forward to foster a business-friendly environment.


Tourism revenues nosedived -81% between January-August 2020 compared to the same period in 2019, according to preliminary figures from the Finance Ministry and the Bank of Greece, and international passenger numbers at Greek airports were down over -70%.

Despite this year’s underperformance, tourism industry participants and tour operators interviewed by Kathimerini newspaper estimate that Greece could achieve up to 50% of 2019 revenues in 2021. Multinational tourism group TUI estimates that bookings could reach 50% of 2019 levels, with up to 35% of pre-bookings this year. Data from airlines for next year also point towards 60% of their passenger capacity, up from much lower levels this year.


Privatisation agency HRADF expects to close three deals by this year’s end, including the resort development of the Afandou site in Rhodes, the Alimos Marina, and the Hellinikon redevelopment. Tenders for key assets such as the DEPA spin-offs, the Kavala gas storage facility, and the Egnatia highway are all expected to hit key milestones by the end of 2020, despite delays imposed by the pandemic.

Located in Athens, Alimos Marina is one of the largest marinas in Greece. Copyright: Aerial-Motion / Shutterstock

The Hellenic Vehicle Industry (ELVO) is due to pass from the Greek state into the control of the consortium of Israeli companies Plasan and SK Group in a matter of weeks. The €29-million business plan submitted by the investors to win the tender includes the creation of 600 jobs and investment in infrastructure and equipment, with a view to expanding the manufacturer’s activities to non-military vehicles.


Alpha Bank is said to be heading for an October 9 deadline for binding offers on its Galaxy project. The €10.8-billion securitisation is the largest undertaking by a Greek bank, with PIMCO, Davidson Kempner, Cerved, and Credito Fondiario making up the short-list of potential bidders.

Green Fund

The Hellenic Development Bank’s Greek Green Fund is expected to launch a €4-billion investment package aimed at renewable energy and energy efficiency projects. Interest from domestic and international investors has been strong since the call was put out at the beginning of August, and the fund is expected to become operational in the first half of 2021.

Stock market

The ASE general index notched up weekly gains of 3.53%, increasing its capitalisation by €1.17 billion. The de-escalation of tensions in the eastern Mediterranean is credited with allowing investors to calmly assess the positive news of the past few weeks and take decisive action, elevating the index to 658.54 after a protracted period of sideway trading.

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