The Greek Wire - March 2023

The Greek Wire is a monthly newsletter aiming to inform you about key economic and political developments in Greece.

edited by Konstantinos Maravelidis

Growth revised upward to 2-2.5%
The Greek government is making the necessary adjustments in view of the Stability Program 2024-2027, which it will submit to Brussels by end-April. The new growth forecast is 2.3%. Inflation forecast is being revised to around 4.5%, from the 5% in the budget. Finally, the forecast for unemployment is below 12%, compared to the budget estimate for 12.6%.

Greek banks profile is solid
Greek banks reported an aggregate net profit of EUR 3.7 billion in FY 2022 which compares to a net loss of EUR 4.7 billion in FY 2021. Capital base and the quality of their assets improved, while their revenue growth is up significantly, DBRS Morningstar said in a report on the country’s four systemic banks (Alpha, Eurobank, National and Piraeus). Revenues in 2022 reflected improvements in all streams, including net interest income, net fees, and other income. Cost management remained sound despite inflationary pressures. Loan loss provisions and cost of risk were down markedly in 2022, and asset quality improved further in the year, driven by de-risking, low new non-performing exposure (NPE) inflows and higher new loans. Their ample, growing and mostly granular deposit bases provide Greek banks with a rather stable, albeit moderately diversified, funding mix. Liquidity was sound and capitalisation improved after the previous impact of de-risking.

Greek Industry on the rise - Turnover Index +17.7% in January 2023
The Overall Turnover Index in Industry (both Domestic and Non-Domestic Market) in January 2023 recorded an increase of 17.7% compared with the corresponding index of January 2022. The Overall Turnover Index in Industry in January 2022 increased by 36.4% compared with the corresponding index in January 2021. The Overall Turnover Index in Industry in January 2023, compared with December 2022, recorded a decrease of 17.2%.

Source: Hellenic Statistical Authority (ELSTAT)

Inflation fell to 6.5% in February
February's result represented the lowest inflation rate since February 2022. The Harmonized Index of Consumer Prices (HICP) increased by 6.5% in February 2023 compared with February 2022 . Compared with January 2023 increased by 0.2%.The asynchronous impact of higher interest rates, the rapid turnaround in the monetary policy stance, an overreliance on most recent inflation rates and a highly uncertain macroeconomic environment means the ECB is more likely to overtighten in this current cycle. In February 2022, the monthly rate of change of the HICP was 0.9%. The average HICP for the twelve - month period from March 2022 to February 2023, compared with the corresponding index for the period March 2021 to February 2022, increased by 9.4%. The annual rate of change of the average HICP between the twelve - month period March 2021 to February 2022 in comparison to the period March 2020 to February 2021 was 1.9%.

Source: Hellenic Statistical Authority (ELSTAT)

Wages Cost: Increase of 4.5% in the 4th quarter 2022
The unadjusted Index of Wages Cost for the 4th quarter 2022, compared with the corresponding index of the 4th quarter 2021, recorded an increase of 4.5%, while a decrease of 1.6% was recorded when comparing the corresponding index of 2021 with that of 2020. The Index of Wages Cost for the 4th quarter 2022, seasonally adjusted but not adjusted for the number of working days, recorded an increase of 7.1%, compared with the corresponding index of the 4th quarter of 2021, while a decrease of 1.5% was recorded when comparing the corresponding index of 2021 with that of 2020.

Source: Hellenic Statistical Authority (ELSTAT)

Greek airports: Passenger traffic grows 53.3% in February
Passenger traffic in Greek airports recorded a spectacular increase in February, with the number of passengers exceeding 2 million, up 53.3% in comparison with February 2022 and up 1.5% compared with February 2019. According to data announced by the Civil Aviation Authority the number of passengers reached 2,072,960 in February, from 1,351,951 in 2022 and 2,042,595 in 2019.During the first two months of the year, passenger traffic (international and domestic) totaled 4,282,553, up 64.4% from the corresponding period in 2022 and up 2.5% from 2019.

Unemployment rate at 11.9% (4th quarter 2022)
The unemployment rate for the fourth quarter of 2022 was 11.9%. The unemployment rate was 11.6% in the previous quarter (2022 Q3) and 13.2% in the corresponding quarter of the previous year (2021 Q4).The number of persons employed amounted to 4,135,231, recording a decrease by 1.9% compared to the previous quarter and an increase by 2.0% compared to the same quarter of the previous year. The number of unemployed persons amounted to 558,416, recording an increase by 0.5% compared to the previous quarter and a decrease by 9.6% compared to the same quarter of the previous year. Most of the employed (49.5%) report having worked 40 - 47 hours in the reference week while a significant share (19.2%) reports having worked for 48 hours and more. Most of the employed persons (78.1%) worked the usual hours during the reference week. 7.1% of them state that they wish to work more hours, 3.1% are part-time workers who wish to work more, and they are available to start working more in the next two weeks, and 1.5% of the employed report having more than one job.

Source: Hellenic Statistical Authority (ELSTAT)

Greek real estate: Apartment rates keep soaring
Apartment prices are estimated to have increased on average by 12.2% year-on-year in the fourth quarter of 2022, while in 2022 apartment prices increased at an average annual rate of 11.1%, compared with an average increase of 7.6% in 2021. According to data collected from credit institutions, and announced by Bank of Greece, in the fourth quarter of 2022 the year-on-year rate of increase in prices was 12.1% for new apartments (up to 5 years old) and 12.2% for old apartments (over 5 years old). For 2022, prices of new apartments increased on average by 11.8%, against an increase of 8.2% in 2021, whereas prices of old apartments increased by 10.5% in 2022, against an increase of 7.2% in 2021.

Increase of 31.3% in construction
The Production Index in Construction (IPC) in the 4th quarter 2022 recorded an increase of 31.3% compared with the 4th quarter 2021. The IPC in 4th quarter 2021 increased by 8.3% compared with the corresponding index in the 4th quarter 2020. The Production Index in Construction (IPC) in the 4th quarter 2022 recorded an increase of 52.8% compared with the 3rd quarter 2022. In the 4th quarter 2021, the IPC increased by 40.4% compared with the corresponding index in the 3rd quarter 2021.

Source: Hellenic Statistical Authority (ELSTAT)

loans serviced by Credit Servicing Firms
In the fourth quarter of 2022, the nominal value of loans to the domestic private sector serviced by domestic CSFs that have been transferred to non-resident specialised financial institutions decreased by €289 million. According to data announced by the Bank of Greece, the total value of loans decreased to €70,679 million at the end of the fourth quarter of 2022, from €70,968 million in the previous quarter. The nominal value of serviced corporate loans decreased to €23,587 million in the fourth quarter of 2022, from €23,679 million in the previous quarter. The nominal value of loans to individuals and private non-profit institutions serviced by CSFs increased by €77 million to €37,428 million at the end of the fourth quarter of 2022. In further detail, consumer loans increased by €31 million to €15,854 million, while the corresponding housing loans increased by €46 million to €21,386 million.

Source: Bank of Greece

Greek Merchant Fleet decreased by 0.5% in January 2023
The Greek Merchant Fleet decreased by 0.5% in January 2023 compared with January 2022. No change was recorded in January 2022 compared with January 2021. The gross tonnage of the Greek Merchant Fleet, for vessels of 100 GRT and over, recorded a decrease of 4.1% in January 2023 compared with January 2022. A decrease of 1.9% was recorded in January 2022 compared with January 2021.

Source: Hellenic Statistical Authority (ELSTAT)

New turnover high in retail
Greek businesses had a very strong year in 2022, with sales seen to be extremely enhanced in all sectors. For the enterprises in retail trade divisions, the turnover in January 2023 amounted to 3.1 billion euro, recording an increase of 31.6% in comparison with January 2022, when the respective turnover was 2.35 billion euro and a decrease of 20.5% in comparison with December 2022, when the respective turnover was 3.90 billion euro. The activities that recorded the biggest increase in turnover in January 2023 compared with January 2022 are: Sale of motor vehicles, increased by 76.1% and Retail sale of music and video recordings in specialized stores, with an increase of 67.6%.

Source: Hellenic Statistical Authority (ELSTAT)