“Greece’s economic recovery” has become a kind of buzzword these last days, especially in the news, on the occasion of Alexis Tsipras’s recent visit in the US. Doland Trump, the President of the US, has himself praised Greece’s economic revival last Tuesday, while the head of the International Monetary Fund (IMF) Christine Lagarde complimented Alexis Tsipras and the Greek people on the notable progress Greece has achieved.
Looking at the recent economic data, one can remark that the Greek economy is gradually moving from a state of prolonged economic crisis to a state of economic recovery. The following figures are indicative of this trend:
The fiscal performance has strengthened significantly in recent years, producing in 2016 a primary surplus of 3.9% of GDP, which is the higher in at least the past 25 years. For 2017, according to the Finance Ministry, the primary surplus is estimated at around 2.2% of GDP. For 2018, the Greek economy is foreseen to achieve a primary surplus of 3.5% of GDP.
Although growth rate estimates for 2016 were very recently revised from zero to -0.2%, the trend for 2017 is a clearly positive one towards a growth rate of 1.8% foreseen to achieve a growth rate of 2.4% of GDP in 2018.
Economic climate index
The Economic Climate Index, measuring both consumer confidence and sub-indexes for business expectations in industry, construction, services and retail trade broke the 100-point barrier in September, edging up to 100.6 points against 99 points in August 2017 and 91.8 points a year ago.
Foreign Direct Investment (FDI)
Greece achieved an impressive performance in attracting FDI in 2016, despite the economic crisis the country is facing since 2010. More specifically, total (gross) FDI inflows almost reached 3.5 billion Euros, increased by 82% since 2015 and 14% since 2014. Net inflows reached 2.8 billion Euros, the largest amount recorded since 2008, before the beginning of the crisis.
Unemployment rate is on a downward trend, from 24.9% in 2015 to 23.5% in 2016 and 22.4 in the first four months of 2017.
Latest positive developments
- Successful issue of bonds last July, in a first attempt of accessing international markets under the ESM support program, under which €3 billion of 5‐year bonds issued at a 4.625% interest rate. This rate is below the 4.95% rate of 2014, when the country had last accessed the markets. The majority of the 200 official offers were “real investors of global reach and not vulture funds”.
- Closure of the EU Excessive Deficit Procedure (EDP) for Greece as a result of the positive headline fiscal balance for the first time in 2016 (0.7% of GDP).
- Credit rating agencies (Moody’s and Standard and Poor’s) have recently changed the Greek economy’s outlook from stable to positive. Moody’s has also upgraded long‐term issuer rating and all senior unsecured bond and program ratings.
US investment interest expressed at the last PM Alexis Tsipras’ visit to US
During their visit in the US and their multiple meetings with US entrepreneurs and investors, PM Alexis Tsipras and the Economy Minister Dimitris Papadimitriou stressed the perspectives of the Greek economy underlining the favorable and safe environment for investing in Greece. “Now is the time to trust Greece as its economy is turning a corner and exiting the crisis”, Alexis Tsipras said in a keynote address delivered at the Brookings Institution.
US investors expressed a big interest in the domains of energy, tourism, agri-food, digital technology, real estate and infrastructures mentioning that it is the right moment to invest in Greece. US entrepreneurs also expressed their interest in the domain of the audiovisual sector, following the recent measures taken from the Greek government proving funding and assistance to audiovisual productions in Greece.
“All parties are recognizing that Greece is on a growth path, heading towards the exit from the adjustment program”, said the Minister of Economy Dimitris Papadimitriou, referring to his meetings with representatives from investment US funds such as BlackRock, York Capital Management, Brigade Capital etc.
In order to enhance the cooperation of the two countries in the domain of economy and investments, the creation of a work group between the competent Ministries was announced, during the press conference of Alexis Tsipras and Donald Trump. Moreover, the US will be the honored country at the 83rd Thessaloniki International Fair next year, playing a significant role in Greece’s efforts to attract US investments.
Prime Minister Alexis Tsipras discusses the state of cooperation between Greece and United States on economic and security issues in Southeast Europe:
Main Sources: Ministry of Finance, General Secretariat of Economic Policy, General Directorate for Economic Policy – Briefing Note August 2017; Hellenic Statistical Authority “The Greek economy” 13.10.2017; Foundation for Economic & Industrial Research (IOBE) “Research on economic conjuncture” September 2017 (in Greek); Enterprise Greece – Foreign Direct Investment
Read more via Greek News Agenda: Institute of Alternative Policies sees positive developments in Greek economy; IMF Report sees progress; Greece returns to bond markets