The Greek Wire - October 2022

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

Greece debt is decreasing after investments and exports rise
Investments and exports have taken off and all this serves to reduce levels of public debt, which this year dropped to 170% of GDP, proving that economic progress can go hand-in-hand with fiscal balance. The Hellenic Statistical Authority (ELSTAT) announced fiscal data for the years 2018-2021 compiled in the context of the second Excessive Deficit Procedure (EDP) notification of 2022. These data have been produced on the basis of the new Regulation ESA 2010 (549/2013) for the System of National Accounts, which became obligatory as of 01.09.2014. The deficit of General Government for 2021, in accordance with ESA 2010, is estimated at -13.6 billion euro (-7.5% of Gross Domestic Product), while the gross consolidated General Government debt at year-end 2021 is estimated at a nominal value of 353 billion euro (194.5% of Gross Domestic Product). Greece could face a very challenging year in 2023 but is prepared and the country’s national debt poses no “real fear”, said the minister of development and investments Adonis Georgiadis to Reuters on 21.10.2022. “Nobody’s happy with interest rates going up” but Greece’s national debt is going down rapidly and will continue to go down, he added. “There is not really any danger from our national debt in the near future.”.

Bond reopening raises €975 million
A return by the Greek state to international capital markets was met with strong investment interest, as the reopening of a five-year bond was almost two-and-a-half times oversubscribed. In an announcement, the Public Debt Management Authority said that offers exceeded 1.865 billion euros and the Greek state finally accepted offers worth €975 million, up from the initial target of €750 million. The bond price was set at 99.3 basis points.

Greece can play a central role in the transfer of green energy to Europe from the countries of the Africa and the Middle East
According to Kathinerini, Greece claims a central role in the transfer of green energy produced in the countries of Africa and the Middle East to Central and Western Europe, which urgently needs to replace Russian natural gas and leave behind pipelines and fossil fuels, launching new international connections in each direction. Greece, through the Independent Power Transmission Operator (ADMIE), has already launched several international interconnections of strategic nature, in order to form a green energy corridor between Europe, North Africa and the Middle East, namely the interconnection of Greece with Cyprus and Israel and Greece with Egypt.

Bank credit and deposits – September 2022
The annual growth rate of total credit extended to the domestic economy stood at 7.2% in September 2022, compared with 7.7% in the previous month. The annual growth rate of total deposits stood at 6.1% in September 2022, compared with 5.2% in the previous month. Deposits placed by the private sector increased by €2,255 million in September 2022, compared with an increase of €89 million in the previous month. In September 2022, deposits placed by the general government decreased by €448 million, compared with an increase of €527 million in the previous month; the annual growth rate decreased to 3.3%, compared with 5.6% in the previous month. In September 2022, corporate deposits increased by €1,502 million, compared with a decrease of €376 million in the previous month; the annual growth rate increased to 11.5% from 7.8% in the previous month. In particular, deposits from NFCs increased by €1,879 million, against a decrease of €412 million in the previous month. Deposits placed by insurance corporations and other financial intermediaries decreased by €377 million, compared with an increase of €35 million in the previous month. In September 2022, deposits placed by households and private non-profit institutions increased by €753 million, compared with an increase of €465 million in the previous month; the annual growth rate increased to 4.6% from 4.4% in the previous month.

Greek Bank Lending Survey – Q3 2022
The credit standards for loans to non-financial corporations (NFCs) remained unchanged in the third quarter of 2022. The terms and conditions remained also unchanged, while the overall demand for corporate loans increased. The credit standards as well as the terms and conditions for loans to households remained unchanged. The demand for consumer credit increased, while the demand for housing loans decreased.In the third quarter of 2022, the credit standards for loans to non-financial corporations (NFCs) remained unchanged compared with the second quarter of 2022, in line with the expectations expressed in the previous quarterly survey round. Moreover, banks expect that credit standards will remain almost unchanged during the fourth quarter of 2022. The overall terms and conditions for loans to NFCs remained unchanged compared with the second quarter of 2022. The overall demand for loans to NFCs, both for small/medium as well as for large enterprises, increased, driven by financing needs for fixed investment and working capital. During the next quarter, the overall demand for loans to both small/medium and large corporations is expected to increase further. In the third quarter of 2022, the ratio of rejected applications for loans to NFCs remained unchanged compared with the previous quarter.

Disposable income increases in Greece
The disposable income of Greek households and nonprofit institutions grew 1.7% in the second quarter of 2022, totaling 32.98 billion euros, from €32.45 billion in the same period last year, the Hellenic Statistical Authority said on Wednesday. Final consumption spending grew 20.1% to €37.7 billion, while the ratio of gross savings/gross available income fell to -14.2% from 3.4% in 2021. Private investments (gross fixed capital investments) totaled €3.6 billion, while general government net loans fell to €1.6 billion from €3.4 billion in 2021. The external balance of goods and services recorded a deficit of €4.1 billion in the second quarter of 2022 from a shortfall of €4.43 billion last year, with imports totaling €30.58 billion and exports amounting to €26.47 billion.

Turnover Index in Industry increase of 42%
The Overall Turnover Index in Industry (both Domestic and Non-Domestic Market) in August 2022 recorded an increase of 42% compared with the corresponding index of August 2021. The Overall Turnover Index in Industry in August 2021 increased by 31.8% compared with the corresponding index in August 2020. The Overall Turnover Index in Industry in August 2022, compared with July 2022, recorded a decrease of 15%. The average Overall Turnover Index in Industry for the 12-month period from September 2021 to August 2022 increased by 38.9%, compared with the corresponding index of the 12-month period from September 2020 to August 2021. The average Overall Turnover Index in Industry for the 12-month period from September 2020 to August 2021 increased by 10.1% compared with the corresponding index of the 12-month period from September 2019 to August 2020.

Greek tourism soared in 2022 - Turnover increase of 24.3% for the enterprises in Accommodation and Food Services
For the enterprises in Accommodation Activities, the turnover in August 2022 amounted to 1,649,985,730 euro, recording an increase of 25.6% in comparison with August 2021, when the respective turnover was 1,313,803,846 euro. For the enterprises in Food and Beverage Service Activities (division 56 of NACE Rev.2 classification), obliged to double-entry bookkeeping, for which data are available on a monthly basis, the turnover in August 2022 amounted to 248,386,359 euro, recording an increase of 16.0% in comparison with August 2021, when the respective turnover was 214,060,495 euro. In total, for the enterprises in Accommodation and Food and Beverage Service Activities amounted to 1,898,372,089 euro, recording an increase of 24.3% in comparison with August 2021, when the respective turnover was 1,527,864,341 euro. For the enterprises of the Regional Units with a contribution to the total turnover of the year 2021 greater than 1%, the biggest increase in the turnover of August 2022 compared with August 2021 was recorded in the Regional Unit Kos (46.4%) and the smallest increase (2.2%) was recorded in the Regional Unit Lassithi.

Seven Greek islands among Europe’s top 20
Seven Greek destinations rank among the top 20 in Europe, per the list for the 2022 Readers’ Choice Awards of the prestigious US travel journal. Kos is number 16, Rhodes is 11th, Corfu 10th, Paros ninth, Santorini ranks sixth, Mykonos came fourth and Crete was second only to Spain’s Ibiza. Cyprus was voted 13th. Greece had by far the most entries in the top 20, with Spain and Italy managing only three entries each.

18.8% rise in retail trade turnover
For the enterprises in retail trade divisions, the turnover in August 2022 amounted to 3.23 billion euro, recording an increase of 18.8% in comparison with August 2021, when the respective turnover was 2.71 billion euro and a decrease of 6.3% in comparison with July 2022, when the respective turnover was 3.44 billion euro. The activities that recorded the biggest increase in turnover in August 2022 compared with August 2021 are: Sale of cars and light motor vehicles, increase 42.6%. Retail sale of footwear and leather goods in specialized stores, increase 29.9%. The Regions that recorded the biggest increase in turnover in August 2022 compared with August 2021 are region of Dytiki Makedonia, increase 23.5% and region of Attiki, with an increase 21.5%.

Investment in the construction industry has soared
The Total Building Activity (private-public) in Greece, in July 2022 which is calculated on the basis of the number of issued building permits, amounted to 2,254. This figure corresponds to 521,200 m2 of surface and 2,580,605 m3 of volume, reflecting, respectively, a 2.3% decrease in the number of building permits, a 23.3% decrease in surface and a 4.8% decrease in volume, compared with the corresponding month of 2021. The building permits for the Private Building Activity issued in Greece in July 2022 amounted to 2,224. This figure corresponds to 504,407 m2 of surface and 2,501,817 m3 of volume. In comparison with the same month of 2021 there is a 3.2% decrease in the number of building permits, a 25.6% decrease in surface and a 6.7% decrease in volume.

Greek Merchant Fleet increased by 0.2%
The Greek Merchant Fleet increased by 0.2% in August 2022 compared with August 2021. A decrease of 1.0% was recorded in August 2021 compared with August 2020. The gross tonnage of the Greek Merchant Fleet, for vessels of 100 GRT and over, recorded a decrease of 1.4% in August 2022 compared with August 2021. A decrease of 4.6% was recorded in August 2021 compared with August 2020.

2.2% increase in new cars - September 2022
A total of 15,629 road motor cars (both new and used from abroad) were put into circulation for the first time in September 2022, recording a 2.2% increase compared with the corresponding month of 2021 when the number of road motor cars was 15,291. In September 2021, a 3.6% increase had been observed in comparison with the corresponding month of 2020. A total number of 9,388 new cars were put into circulation in September 2022 compared with 7,609 in September 2021, recording a 23.4% increase. The new motorcycles over 50cc (and used from abroad) that were put into circulation for the first time in September 2022 amounted to 5,746, against 5,134 in 2021, thus recording an 11.9% increase. In September 2021, a 15% increase had been observed in comparison with the corresponding month of 2020.

New data on unemployment
The seasonally adjusted unemployment rate in August 2022 amounted to 12.2% compared to the downwards revised 13.7% in August 2021 and to the downwards revised 12.2% in July 2022. The number of employed persons amounted to 4,105,420 persons increasing by 46,812 persons as compared with August 2021 (+1.2%) and by 1,618 persons compared with July 2022. The number of unemployed persons amounted to 569,609 decreasing by 73,289 persons as compared with August 2021 (-11.4%) and by 2,662 persons compared with July 2022 (-0.5%). The number of persons outside the labour force, i.e., persons under the age of 75, that neither work nor look for a job, amounted to 3,151,133, decreasing by 4,274 persons as compared with August 2021 (-0.1%) and by 1,581 persons compared with July 2022 (-0.1%).

Central government net borrowing requirement on a cash basis, January-September 2022
In January-September 2022, the central government cash balance recorded a deficit of €5,380 million, compared to a deficit of €11,148 million in the same period of 2021. During this period, ordinary budget revenue amounted to €40,482 million, compared to €33,079 million in the corresponding period of last year. Ordinary budget expenditure amounted to €43,925 million, from €45,296 million in January-September 2021.