GIG Economic Bulletin – November 16, 2020

Recession forecasts are now converging on the “worst case” scenario for 2020, however the climate is upbeat for major investments in the digital sector while the TAP pipeline, a landmark transcontinental energy project, started commercial operations on Sunday.

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IPTO subsidiary Grid Telecom is preparing its entry into the Greek telecoms market, as the TAP pipeline commenced commercial operations last week. Three privatisation projects, including the concession of the underground gas storage facility at Kavala, make positive strides following legislative changes, and a new 50% tax cut aims to incentivise foreign executives to relocate to Greece in 2021. Meanwhile, growth prospects point towards the worst case scenario for 2020.


National Bank of Greece (NBG) forecasts a recession of -9.4% this year on the assumption that the pandemic curve will bend allowing the ongoing lockdown to be relaxed in December. Eurobank, on the other hand, predicts a -9% contraction in 2020, followed by growth of 5% and 3.5% of GDP in 2021 and 2022, respectively.

Oxford Economics estimates the second lockdown will cause a -3.1% contraction in Q4, with the annual recession reaching -8.2%. Growth in 2021 has been revised down to 4.5% from the previous forecast of 7%, while the economy is expected to rebound by an impressive 9.2% in 2022.

Over 33,350 jobs were lost in October compared to 120,000 lost the same month last year, owed to fewer hirings this period during the tourist season.

Construction activity declined by -3.3% in terms of new permits, and -8.7% with respect to area during August, the first negative month since VAT on new build properties was frozen at the end of 2019.

More than half the executives from 22 sectors surveyed by ICAP found the COVID-19 crisis more severe than the 2009-2013 financial crisis, and three out of ten expect to start experiencing a recovery in 2022. Securing liquidity is seen as the biggest challenge due to the pandemic (7/10 respondents), while containing expenditure is also seen as critical (6/10 respondents).

Digital and tech

Up to €15 billion worth of investments are expected to boost the Greek digital economy over the coming years including €6.9 billion related to 5G and network infrastructure, €870 million for the fibre-optics network, €6 billion from the EU Recovery Fund for digital transformation projects, and €1 billion linked to Microsoft’s data centre investment.

Grid Telecom, a 100% subsidiary of power transmission operator ADMIE (IPTO), is about to enter the telecoms market offering high-speed fibre over its 3,000-km network piggy-backing on the power distribution grid. The company also plans to double the length of the network to reach all neighbouring countries by the end of this year, while it will also be offering collocation services at its substation sites, and partnering with Vodafone and Wind venture Victus to host 5G networks.

Over €2.3 billion was spent on R&D in Greece in 2019, equivalent to 1.27% of GDP, according to official figures from the National Documentation Centre. Spending was up 7.2% on the previous year.


The Trans-Adriatic Pipeline (TAP) announced the commencement of commercial operations on November 15. The 878-km gas pipeline was 4.5 years in the making and will transport gas from Azerbaijan to the European markets via Greece, Albania and Italy.


Three privatisation projects are moving ahead over the coming weeks after the Greek state finalised the details of the legal framework. These include the sale of the 49% stake in power distribution network operator HEDNO, the double tender for mining company LARKO, and the concession on the underground gas storage facility at Kavala, which are also set to enter the next phase by early December.


The Single Supervisory Mechanism (SSM) appears reluctant to approve the blanked extension of loan moratoria into 2021, which was requested by Greek banks. There are thoughts to extend the measure into 2021 but only for sectors that are directly affected by the pandemic, and for households whose income has suffered and whose loans have been frozen since April. In Greece, applications stopped at the end of September and banks have frozen €26 billion worth of loans from 400,000 borrowers.

The SSM adopted a negative view regarding the request by Piraeus Bank to make a coupon payment on the €165 million related to its contingent convertible bonds (CoCos), based on the guidance of the supervisory authority to banks to withhold dividend payments due to the pandemic. Piraeus Bank has five days to respond to the decision, which has to be approved by the ECB’s board on November 25. However, assuming that the process will proceed as expected, the payment will be missed and the CoCos will be converted into shared, and triggered in favour of the Hellenic Financial Stability Fund (HFSF). This would raise the state’s share in the bank to 61.3%, from 26.4% currently.

Relocation incentives

The Greek government is in talks with three London-based banks with a view to attract post-Brexit relocations of banking services to Greece, according to a Bloomberg TV interview with the Greek PM’s chief economic advisor, Alexis Patelis.

A tax-free income for seven years for 50% of earnings will be offered to foreign executives relocating to Greece in 2021. Any Greek or foreign citizen who had their tax residence out of Greece during the last seven years will be eligible for the benefits of the programme. The main condition is that the move will create a new job position and not replace an existing one.

Athens ranks #9 in Conde Nast Travelers’ list of friendly European cities.

Real estate

Greece remains in 28th place in the PwC/ULI index of Europe real estate trends, however investment and construction activity are expected to contract in 2021. The main factors affecting the market are the restrictions on international travel hampering inward investment, and the lockdown bringing uncertainty to the retail property market. Growth potential is seen in data centres, logistics, and property connected with communications infrastructure.

Thessaloniki expo redevelopment

Over 100 architectural firms from 33 countries submitted entries to the competition for the redevelopment of the 175,000-sqm Thessaloniki ConfEx Park, home of the Thessaloniki International Fair, a flagship project in the redevelopment of Greece’s second largest city as an international business hub and tourist destination. By December 2020, 15 teams will be pre-selected, which will submit their proposals by May 2021, while the selection of the first prize by the international jury will take place in June 2021.

Stock market

The ASE general index rebounded with weekly gains of 11.5% to close at 655.68 points. The banking sector led with 27% on Monday, spurred by the surprise upgrade announced by Moody’s at the end of the prior week along with the positive climate fostered by news of Pfizer’s vaccine development.

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