Economic Bulletin – May 11

Greece takes further steps to ease lockdown, as government begins to outline plan to re-start tourism

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 The European Commission forecasts a 9.7% contraction of Greece’s GDP in 2020, but does not take into account government support measures estimated to the tune of 6.9% of GDP. Greece Joins an informal international forum with seven other countries that have succeeded in mitigating the effects of the pandemic; the real estate market shows first signs of the benefits of a bolstered international brand; while another milestone is completed regarding the landmark Hellinikon project.

 COVID-19 measures

The second phase of the easing of Greece’s lockdown kicked in on Monday May 11, with the opening of small retail businesses, betting shops, and driving schools. Together these businesses comprise 25% of those forced to shutter under emergency measures, on top of the 10% which re-opened in the previous week. Final-year high-school students will also return to their classrooms to prepare for university entry exams. Strict hygiene and distancing protocols will apply to all activities.

Economy

The European Commission released its Spring 2020 Economic Forecast, which predicts a -9.7% contraction for the Greek economy in 2020, followed by a 7.9% rebound in 2021. Greece is expected to suffer the most severe economic hit from the pandemic among EU economies because of its high dependency on the hospitality sector and the large role played by small and micro businesses. The Commission’s forecast does not take account of government support measures estimated to be worth 6.9% of GDP, and makes more pessimistic assumptions about tourism revenues than the Greek government’s official projection.

Some good news emerged on Friday, when the Eurogroup agreed on minimal terms for the ESM credit line, which will allow euro-area Member States to borrow up to 2% of their GDP to cover the direct and indirect costs of fighting the pandemic. For Greece, this could provide breathing space of €3.8 billion at below-market borrowing rates with very few strings attached. However, the Finance Ministry has not yet indicated whether it intends to tap the facility.

Tourism

Greece has joined an informal forum of eight countries – with Austria, Denmark, Norway, the Czech Republic, Israel, Singapore and Australia – that have successfully managed the first wave of the pandemic. The group will share best practices for easing lockdowns, and discuss solutions to revive national economies and manage a possible second wave of infections. Prime Minister Kyriakos Mitsotakis has initiated a more systematic discussion on protocols that could underpin the creation of “safe corridors” for travel between participating countries.

The first tangible evidence of the positive mood towards Greece as a tourist destination was recorded in the survey presented by TCI Research, which captures the global sentiment by monitoring global social media posts. Greece recorded the highest positive balance of comments compared to its peers in the Mediterranean like Italy, Spain and France, increasing its lead in the course of the pandemic.

The World Travel and Tourism Council’s (WTTC) annual report highlighted the vital role of the tourism sector in the Greek economy. Launching the report, WTTC President Gloria Guevara said that due to its successful handling of COVID-19 Greece could be among the first countries in Europe to welcome tourists.

The government is close to releasing its strategic plan for tourism, which will be based on five pillars: hygiene protocols; economic support for tourism businesses; diplomatic agreements on border controls; a targeted promotional campaign; and leveraging existing relationships with tour operators.

Digital

Patras-based semiconductor start-up Think Silicon was acquired by Applied Materials of Santa Clara, California. Think Silicon specialises in the design and development of high-performance graphics processing units with applications in portable devices and domestic appliances.

On April 29, Greece was removed from the U.S. watchlist on intellectual property rights, opening the road to further inward investment in the tech sector.

Real Estate

Property website spitogatos.gr reported a 19% YoY rise in property searches by foreign buyers in April, suggesting that the Greek real estate market could see an immediate benefit from the positive image of the country emerging from the pandemic. German, U.K. and U.S.-based buyers topped the ranks in online searches for Greek properties.

Greek real estate “prices are well below their pre-sovereign crisis peaks (down by 35% in residential property), allowing for handsome yields in an era of ultra-loose monetary policy.” Deputy Governor Theodoros Mitrakos Copyright: Andrey_Popov / Shutterstock.com

Banks

Banks are preparing to extend €23 billion of credit to the private sector in the course of 2020 through a range of schemes, including guarantees by the Hellenic Development Bank and the Greek state. The Bank of Greece will be convening a working group with a view to cutting red tape around loan approvals, while Prime Minister Mitsotakis personally urged bankers participating in a teleconference on Tuesday to act swiftly to absorb the economic shock of the pandemic.

Privatisations

The operations of the privatisation fund HRADF have been extended by two years until July 2022, to make up for pandemic-related delays in the privatisation programme. The fund’s president told Reuters that the organisation will aim to ride out the storm and not rush to close deals at sub-optimal revenues.

Hellinikon

The redevelopment of the former airport site at Hellinikon moved one step closer with the Council of State, Greece’s top administrative court, dismissing the appeal by Hard Rock International against its exclusion from the tender for the casino permit. This leaves Mohegan Gaming and Entertainment as the sole bidder for the license to operate the casino resort planned for the site.

Stock markets

The ASE general index closed the week down -3.86% after a week of mixed fortunes for Greek stocks. Banking stocks continued to slide, but several companies stood out with gains. This week’s winners include Mytilineos, which is due to make its debut in the MSCI Emerging Markets index in June, as well as GEK Terna and Lamda Development which rose on news of progress on the Hellinikon project.

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Partners of Greece Investor Guide

On Friday, July 3, Greek Prime Minister @kmitsotakis was present for the start of demolition works at the site of the old Athens airport, which will make way for the emblematic Hellinikon redevelopment project.

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Greece Looks Like a Safer Destination Now https://www.bloomberg.com/opinion/articles/2020-06-17/greece-is-no-longer-bottom-of-euro-zone-class-as-italy-struggles

Greece will not accept a return to the strict oversight once imposed by its international creditors in return for EU emergency aid to deal with the impact of the coronavirus, PM Mitsotakis tells the @FT. https://www.ekathimerini.com/254399/article/ekathimerini/news/mitsotakis-greece-will-not-accept-conditions-on-coronavirus-aid

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