The government has officially extended the lockdown measures until May 4, with the exception of courts of first instance and land registries that will reopen on April 27 to offer a restricted range of services.
The next phase of economic support measures is being designed to kick in, in tandem with a gradual return to business. From June onwards, support for workers and businesses will be tilted towards the worst-affected sectors including tourism and shipping. For the rest of the economy, the government is looking to replace the current furlough scheme with the German Kurzarbeit model of state compensation for personnel working reduced hours, in order to prevent job losses as businesses re-open at limited capacity.
Meanwhile, over €7 billion euros of state-backed loans will be made available to companies from the beginning of May through a new Guarantee Fund, which will be created under the umbrella of the Hellenic Development Bank, with the aim of boosting businesses’ working capital.
EU leaders made a small but potentially significant step towards agreeing on a coronavirus recovery fund for Member States, to be backed by the multi-year fiscal framework of 2021-2027. Speaking after the teleconference, the head of the Eurogroup Mario Centeno said that things are moving in the right direction towards the adoption of shared obligations. The European Commission is due to present its recommendations of the precise form of the mechanism during May.
Slightly more optimistic projections for the economy were released last week, with the Bank of Greece predicting a GDP contraction of between -4% and -8% for 2020. Official government figures put the expected contraction at -4.7% for 2020, followed by 5% growth in 2021.
Moody’s concur broadly in their estimation, with a -5% GDP contraction forecast for 2020, followed by a 4% recovery in 2021. Moody’s have held their rating at B1, based on Greece’s recent good record of hitting its fiscal targets and its timely response to the pandemic.
Standard & Poor’s (S&P) also maintained Greece’s rating at BB-, but revised its outlook from “positive” to “stable”, forecasting a -9% decline in 2020 followed by a rebound in 2021. In its report, S&P noted that Greece has one of the most advantageous debt profiles in its sovereign ratings universe with debt servicing costs limited to 1.5% of GDP, however uncertainty around the duration and the impact of the pandemic resulted in the more cautious outlook.
Fitch kept its rating at BB, but also revised its outlook from “positive” to “stable” because of the expectation of a significant impact of lockdown measures on the Greek economy. Fitch is forecasting a -8.1% contraction in 2020, followed by 5% growth in 2021.
Tourism Minister Haris Theoharis told the BBC that the Greek tourism sector hopes to be “open for business” in July. The government is examining targeted actions that could allow a partial reopening of the tourism sector for a short summer season. Greece is also looking for guidance to the European Commission, which is expected to recommend coordinated hygiene protocols for safe cross-border travel, while pursuing the possibility of bilateral agreements with a select number of countries.
A survey of visitors and businesses carried out by Piraeus University and Open Tourism found that Greece’s strong response to COVID-19 is expected to boost the country’s brand name in tourism, with 71% of respondents seeing a benefit this year, and 83% in 2021. Asked about what measures are likely to attract tourists in the future, most listed enhanced hygiene protocols and flexible cancellation policies.
Internal tourism is being seen as the main source of income for the 2020 summer season, with the government looking to introduce incentives and subsidies to encourage Greeks to take holidays once restrictions on travel are lifted.
Plans for hydrocarbon exploration and extraction activities in Greek waters are being scaled back as a result of the drop in oil prices. Among the projects affected are those of Total, ExxonMobil and Repsol off Crete and western Greece, and HELPE and Energean off the Peloponnese, while Energean is looking for state support to continue its drilling at the Prinos site.
The Greek refinery sector, meanwhile, is taking advantage of low prices to build up stocks of crude, with Hellenic Petroleum and Motor Oil making use of significant spare storage capacity.
As a net oil importer, Greece is expected to reap long-term benefits from low oil prices, which will improve the country’s trade balance and push inflation downwards.
A study by the National Bank of Greece (NBG) called for a “digital reboot” to take advantage of untapped ICT expertise in the country, with a potential to boost GDP by between 2.6 and 6.4 percentage points over the next five years. The report called for move investment in on-the-job training in digital skills, closer collaboration between universities and the business sector, and investment in infrastructure such as 5G networks. Greece’s ICT sector currently accounts for 1.9% of GDP compared to the EU average of 4.4%.
Real estate consultants Henley & Partners predict that the Greek property market will rebound strongly in the wake of the pandemic, driven by foreign buyers and the Golden Visa scheme. While property transactions have stalled during the lockdown, Greece’s growing reputation as a safe country thanks to its success in containing the pandemic could bolster the case for investors looking for a foothold in Europe.
On April 27, the Council of State is due to hear the appeals of the bidders in the tender for the casino license linked to the €8-billion Hellinikon development on the Athens Riviera. Hard Rock and Mohegan Gaming & Entertainment are both contesting the initial tender process. It is hoped that the 20-day hearing could resolve the dispute in time for construction to start in June.
Public Power Corporation (PPC) published its full-year results for 2019, showing a net loss of €1.68 billion. Losses were curtailed by emergency measures taken in Q4, while Greece’s main power utility is in line for a radical transformation according to a five-year plan published earlier in the year, with the scheduled closure of loss-making lignite units and a major investment in renewable generation.
The ASE general index closed the week flat, with a loss of just -0.06%. However, the banking sector suffered losses of -7.5%. Trading volumes were down on previous weeks, suggesting that the sell-off prompted by the effects of the pandemic may have exhausted itself.