GIG Economic Bulletin – June 22

As economic indicators begin to capture the full effect of the pandemic, investors and the government are keeping their eyes on the day after, with an industrial policy push and major steps in several marquee projects

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The Hellenic Fiscal Council predicts a contraction to Greek GDP in 2020 between 7.3% - 9.8%, while the country jumped ahead 9 places in the IMD World Competitiveness Rankings 2020. Prime Minister Kyriakos Mitsotakis announces an ambitious plan to increase the contribution of Greece’s industrial sector to the economy to 15% by 2030, the country’s systemic banks purse plans to clean up their balance sheets, and landmark investment projects in both the tourism and energy sectors roll ahead.


The economic contraction from the pandemic is forecast to reach -7.3% of GDP, according to the baseline scenario published by the Hellenic Fiscal Council, but could hit -9.8% of GDP under an adverse setting. The general government deficit is expected to reach 6.5%, with the budget primary deficit hitting 3.3% of GDP in the base case.

The current account deficit widened to -€1.13 billion in April compared to -€1.10 billion in March, but remained below last April’s figure of -€1.40 billion. This was largely thanks to an improved balance in the goods and primary income account, as imports decreased faster than exports, compensating to some extent for a deterioration in the services balance.

Unemployment fell to 16.2% in Q1 in non-seasonally adjusted terms, down from 16.8% in Q4 2019, and 3 percentage points down from Q1 2019. The number of unemployed dropped to 754,093, the lowest figure since Q4 2010. Most new jobs were created in retail and wholesale trade, followed by transportation and storage.

Q1 turnover in services showed a YoY improvement in 10 out of 15 services tracked by the Hellenic Statistical Authority ELSTAT, led by buildings and landscape activities, cleaning activities and computer programming, and consultancy and related activities. However, there was a deterioration across all sectors on a quarterly basis as the lockdown measures came into force.

Industrial turnover fell by over a third YoY in April according to ELSTAT. The index also showed a -21.3% fall on a monthly basis compared to March as a direct effect of the lockdown. On an annual basis the index fell -5.1% compared to growth of 8.6% that was recorded a year prior in April 2019.

The number of registered unemployed jumped by 25% in May on a YoY basis, as seasonal jobs were shelved due to the pandemic.

Tax revenues missed their target by 33.5%, or €1.14 billion in May, accelerating the trend initiated in March, and causing the government to revise its initial estimate of the primary deficit for the year from 1.9% of GDP to over 3%. Pandemic support measures such as tax deferrals exacerbated the effects of the lockdown on state revenues.


Greece advanced nine places in the Institute for Management and Development’s World Competitiveness Rankings 2020, moving to 49th out of the 63 economies reviewed. Gains were recorded in government efficiency, entrepreneurship and infrastructure, while areas for improvement include expanding the production base, easing access to finance, a more business-friendly tax regime, digital technologies, and supporting dynamic and export-oriented sectors.

Industrial policy

Prime Minister Kyriakos Mitsotakis outlined his plans for a renaissance of Greek industry at the Hellenic Federation of Enterprises (SEV) annual conference. The programme for transforming the country’s productive model rests on three pillars: improving competitiveness, digital and green transformation, and regaining autonomy. The government plans to introduce new tax incentives for R&D spending and “business angel” investing, while leveraging EU funds to support growth areas. The goal is to boost the contribution of industry from the present level of 9.5% of GDP to 15% by 2030.

During SEV’s annual general assembly, Greece’s Prime Minister Kyriakos Mitsotakis highlighted that “Greece is called today to pick up the thread of growth again”. Copyright: PopTika /


Servicers now manage €30.8 billion of bad loans, having increased their portfolio by €7.3 billion from the end of 2019, according to Bank of Greece figures. Most of the increase in Q1 relates to Eurobank’s Cairo securitisation deal with doValue.

The sale of Eurobank’s Cairo portfolio bodes well for the securitisation plans pursued by Greece’s three other systemic banks. The focus now resides on Alpha Bank’s €10.5 billion Galaxy project, which includes the sale of 80% of Cepal, the loan management company. PIMCO, Apollo, Bain Capital, Cerberus, Lonestar and Varde are among the big names scrutinising the deal.

Piraeus Bank has projects dubbed Vega and Phoenix in the pipeline totalling some €7 billion, while NBG is pushing ahead the €6-billion project Frontier. Neither of these plans, however, include loan management companies.

Around €16 billion worth of loans by Greek banks are currently covered by payment moratoria according to Moody’s, and could potentially result in more bad loans. JP Morgan estimates that the ECB proposed “bad bank” could take €10.7 billion worth of COVID-related distressed assets off Greek banks’ balance sheets.


Tourism revenues for April collapsed under the impact of the lockdown measures, coming in at just €7.3 million, compared to €543.5 million in April 2019.

Greek tourism could bring in €14 billion of gross value added this summer, compared to €22 billion in 2019, according to a study published by EY. The figure would drop to €12 billion in an adverse scenario, and rise to €16 should events unfold in a more positive manner. The study predicts that it could be 2025 before the country’s tourism industry returns to 2019 levels. While the report is not optimistic that an extension of the tourist season could help make up the lost ground, it argues that hoteliers and tourism stakeholders could capitalise on Greece’s positive handling of the COVID-19 pandemic if they take the necessary steps to adapt to the new reality.

Developers broke ground on two major new resorts, Dolphin Capital’s €420-million Killada Hills golf resort in the Peloponnese and NCH Capital’s Kassiopi project in Corfu. Killada Hills was the first development to be approved under the new fast-track licensing regime designed to cut tape on strategic investments.


Privatisation fund HRADF announced that seven potential bidders will be moving to the next stage in the tender for 65% of DEPA Commercial, the trading arm of Greece’s largest natural gas supplier. HELPE, Mytilineos, GEK-Terna, Motor Oil and PPC are among the Greek companies that will be able to submit binding offers, while foreign suitors include Shell and Met Holding. PowerGlobe of Qatar and Vitol will not proceed to the next stage.


A solar powered hydrogen production unit could attract €2.5 billion in investments and create 5,000 jobs in Western Macedonia, as part of a project called “White Dragon”. The project, presented by DESFA’s managing director at the virtual Delphi Forum, is a partnership between the gas network operator, gas supplier DEPA, state-owner power utility PPC, and a number of European energy players including Italy’s Snam, Belgium’s Fluxys and Spain’s Enagas.


The Shipping Ministry is preparing to announce a €15-million emergency support package for the shipping sector. Passenger bookings for June are expected to be down by 65-70% as ferries are operating reduced schedules at a maximum 60% capacity due to safety measures.

Stock market

The ASE general index gained 3.33% on a weekly basis as buyers returned to the markets, with banks being some of the clearest beneficiaries.

An expert committee will be tasked with proposing ways of increasing participation in the equities market and growing the capitalisation of the ASE. The committee, which is due to report to the Finance Ministry in July, is expected to put forward suggestions including tax incentives for new investors and new listings, the introduction of Green Bonds, and other innovative investment products.

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