GIG Economic Bulletin – August 3

An escalation in the number of Covid-19 cases in the community is prompting the government to tighten hygiene rules, however measured steps continue to be taken to reopen tourism. Government and stakeholders are starting to look at how best to use EU recovery funds to transform the economy in the post-pandemic era.

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While the Bank of Greece predicts the €32 billion derived from the EU Recovery Package could boost GDP by 2% on a yearly basis, the country’s Economic Sentiment Index ranked the third highest in the EU in July. Meanwhile, a European hedge fund acquires a 6.36% stake in Lamda Development, the developer of the landmark Hellinikon project, Greece’s natural gas networks company announces a €270 million investment, and the government mulls over an incentive programme for the relocation of family offices to Greece.


In the coming week the government is planning to publish the recommendations developed by the Pissaridis Committee focused on the keys to restarting the Greek economy, kicking off a period of consultation which will culminate in the submission of proposals to the European Commission in October, staking the country’s claim to EU recovery funds.

The Bank of Greece (BoG) sees the EU Recovery Package as a strong boost for the country’s growth. In an interview with Bloomberg, BoG Governor Yiannis Stournaras argued that the €32 billion could raise GDP by 2% annually up to 2026. Stournaras added that the big challenge for Greece will be to reform its state operations and absorb the funds, directing them towards investment that will lead to the structural transformation of the economy.

The pandemic has created a €6.4-billion shortfall in the budget over the first half of the year, resulting in a €6.1 billion primary deficit instead of a €313 million surplus. Around €3.9 billion of state revenues were lost due to emergency tax relief measures, while total expenditure including emergency support measures overshot the target by €2.7 billion.


Retail turnover fell by -5.3% YoY in May, while the volume of sales dropped by -5.8%, according to the Hellenic Statistical Authority (ELSTAT). However both indices improved compared to the low marked in April, which saw a -25% fall in the volume of sales. Initial estimates put the economic contraction in the second quarter of 2020 at 16%.

Greece’s Economic Sentiment Index (ESI) rose by 3.2 points in July reaching 90.8 points, according to European Commission figures, making Greece the third highest performer in the EU. Compared to July 2019, the ESI has fallen by 15.8 points.


The government is said to be considering stricter hygiene guidelines in response to a steady increase in Covid-19 cases which are attributed mainly to community transmission, although “imported” cases remain low. While open-air performances recommenced at many landmark venues, at the end of the week the wearing of masks was made mandatory in all closed spaces, and temporary restrictions were introduced applying to bars and events.


Exports are expected to grow at a slower rate than originally anticipated according to the Hellenic Statistical Agency’s survey of exporters. While industry expectations had initially converged on a forecast of 9% growth for 2020, the figure has now been revised down to 2%.

Exports in the first five months of 2020 dropped -13.5% in terms of value compared to the same period last year. Exports to Italy, the largest destination, fell by roughly -12%, while exports to Germany, the second largest market, increased by 11%.


Greece reopened to cruise ships on August 1. Cruise ships adhering to EU health and safety protocols will be allowed to dock at the ports of Piraeus, Rhodes, Heraklion, Volos, Corfu and Katakolon. Over 2.6 million cruise passengers visited Greece in 2019, accounting for €0.5 billion in revenues.

Tourism activity remains limited, with hotel occupancy rates nationwide averaging 22% in July according to the Hellenic Chamber of Hotels (HCH). Meanwhile, figures published by Alpha Bank show a -61% collapse in revenue from tourism-related businesses in the first five months of the year compared to the same period in 2019.

The Ministerial Committee for Strategic investments has approved projects totalling €630 million focussing on the tourism sector. The investments include hotels and resorts in the Peloponnese, Mykonos and Ios.


Public Gas Distribution Networks (DEDA), a subsidiary of DEPA Infrastructures, is set to invest €270 million over the next five years to expand its distribution network to 34 towns and cities across Greece. The programme will add over 1,800 km to the network and install 57,000 new connections across northern, western and central Greece.

DEDA’s 5-year development plan accounts for the largest investment in developing natural gas pipelines since the creation of the first pipeline network by DEPA. Copyright: DenPhotos / Shutterstock

Banking & finance

The Greek government is planning to introduce incentives for family offices to relocate to Greece. The regulatory framework is likely to build on the existing one for shipping companies, while tax incentives are also under consideration.

Real estate

Hedge fund Brevan Howard and co-founder Trifon Natsis have acquired a 6.36% stake in Hellinikon developer Lamda Development, a move which is seen as a vote of confidence in the project and, more broadly, in Greek real estate.

Stock market

The ASE general index recorded losses of close to -33% in the first seven months of 2020, losing €47.7 billion euros in capitalisation. July closed with losses of -3.33%, led by the banking sub-index which lost -16.82%.

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