Our comprehensive assessment of Greece's operating environment and the outlook for its leading sectors are formed by bringing together a wealth of data on global markets that affect Greece, as well as the latest industry developments that could impact Greece's industries. This unique integrated approach has given us an impeccable track-record for predicting important shifts in the markets, ensuring you’re aware of the latest market opportunities and risks in Greece before your competitors.
Greece Country Risk
We expect a return to positive economic growth in 2014 following six years of depression. Thereafter we expect growth to remain well below the pre-crisis range.
Underpinning positive economic growth will be a stabilisation in domestic demand as well as a positive contribution from the current account.
The prospect of further spending cuts and tax hikes will ensure that demonstrations and national strikes remain a key feature of the political landscape over the medium term.
Major Forecast Changes
There are no major forecast changes this quarter.
Key Risks To Outlook
Upside Risks To Deficit Forecasts: The severity of the...
Greece Industry Coverage (16)
BMI View: Favourable weather conditions leading up to the harvest period should provide support to wheat output, so we are forecasting a modest 0.6% increase in output in the 2015 season. Within the livestock sector, we are more optimistic on poultry output, as it is much more affordable than pork and beef. Meanwhile, insufficient sugar beets being cultivated in Greece will weigh on long-term sustainability of its sugar industry.
BMI attributes growth in vehicle sales over the year-to-date to low base effects and pent-up demand in the market following years of sustained declines. We expect these dynamics to continue into 2015, despite our relatively sanguine outlook on the Greek economy.
Passenger car sales in Greece increased 22.2% year-on-year in the first ten months of 2014, to 59,847 units. BMI attributes this growth over the year-to-date to low base effects and pent-up demand in the market following years of sustained declines.
Unemployment remains high, consumer sentiment is weak, and retail sales continue to fall. We expect these dynamics to continue over the year as the economic malaise, combined with austerity measures and political uncertainty, continues. These dynamics weighed on passenger car sales for much of 2013, but the segment rebounded somewhat in the final months of the year on the back of pent-up...
Defence & Security
Greece Defence & Security
BMI View: The report discusses Greece's strategic situation, including its fractious relationship with Turkey, its relations with NATO and other European nations, and its global relations and participation in military operations around the world. In terms of procurement, the report examines Greece's current defence programmes, planned acquisitions and future procurement aspirations in light of the country's economic crisis.
BMI expects Greece to spend USD6bn on defence in 2014. On average, between 2011 and 2013, Greece spent USD6.2bn annually on defence. Spending has progressively declined as the Greek economy has contracted and the government has sought to bring public spending under control. We expect Greece to spend less on defence between 2015 and 2019, spending an average of USD5.5bn. By 2019 we expect Greece to be spending USD5.6bn on...
Food & Drink
Greece Food & Drink
BMI View: We believe that deflation has further to run in Greece and now expect a return to positive inflation to occur in 2016, from 2015 previously. This will be underpinned by weak domestic demand, a fractured credit transmission channel, relatively restrictive monetary policy (despite recent efforts by the European Central Bank to provide monetary stimulus) and the lingering strength of the euro. Moreover, we warn that prolonged deflation poses a risk to economic growth and debt sustainability.
Headline Industry Data (local currency)
2014 per capita food consumption = -0.1%; forecast compound annual growth rate (CAGR) 2013-2018 = +1%.
2014 alcoholic drink value sales = -1.6%; forecast CAGR 2013-2018 = +0.1%.
2014 soft drink value sales = -0.2%; forecast CAGR...
Greece Freight Transport
Freight Demand Picking Up Pace In 2015
Looking at specific Greek transport modes, the main feature of 2015 will be faster growth compared to 2014. All modes will experience cargo volume expansion in a range of roughly 2.0% to 6.0%, ahead of the general rate of expansion experienced in the slowly recovering Greek economy. As in recent years, the best performer will be the Port of Piraeus, lifted by new investment and its role as a European gateway. Foreign trade growth will accelerate to 3.5%, giving a positive boost to freight demand after years of contraction.
The Greek economy is recovering, but the transition seems to be from deep recession to weak growth with continuing downside risks. We now expect GDP to gain 1.2% in 2015, up from an estimate of 0.2% positive growth in 2014, which itself came after six consecutive years of contraction (2008-2013). The problem is that the growth drivers are...
BMI View: A forecasted return to economic growth in Greece and the commencement of several major infrastructure projects are behind our forecasts for growth in the country's construction sector from 2015 onwards. Although the residential sector will remain subdued until 2017, the launch of the first phase of the Trans Adriatic Pipeline (TAP) in 2015 and the privatisation of a range of regional airports will provide a boost to construction sector activity in the short term. Over the longer term the construction sector as a whole remains subdued, undermined by a weak domestic economy and extensive barriers to investment.
Key Developments and Forecasts Include:
Hong Kong based COSCO Pacific has agreed to invest EUR230mn in the Piraeus Port, boosting capacity from 3.7mn...
BMI View : The stabilisation of the economy means that the life segment - finally - appears to have found a floor. Competitive pressures, especially in the motor vehicle sub-sector, mean that premiums have continued to fall in the non-life segment. Premiums will likely only rise slowly from 2015 onwards. At the end of the forecast period, the sector will remain smaller, by many metrics, than it had been in 2011.
No insurance sector suffered as much from the financial crisis in Europe in 2009-11 as Greece's. We cautiously predict that 2014 will be the year in which total premiums finally find a floor. According to the trade association, total life premiums in H114 were 7.6% higher, in local currency terms, than they had been in the previous corresponding period. This growth was due to a 54.1% rise in unit-linked premiums. We think that the driver...
Greece Medical Devices
BMI Industry View: Greece has the fifth largest medical device market in Central and Eastern Europe (CEE) but growth has been constrained by the economic crisis. The market is heavily reliant on imports which experienced a strong decline between 2009 and 2012. While imports returned to growth in 2013, the latest figures suggest this may be short-lived. It is expected that the government's plans to curb expenditure will continue to affect import growth over the forecast...
Oil & Gas
Greece Oil & Gas
BMI View: Greek hydrocarbons production is forecast to decline by 0.6% in 2015 while consumption will go up by 1.3%, leaving a net shortfall of 356,000boe/d that needs to be imported.
Pharmaceuticals & Healthcare
Greece Pharmaceuticals & Healthcare
BMI View: A distinct escalation in political uncertainty will see continued erosion of public and political support for the implementation of much-needed reforms. In addition, drugmakers will see revenue opportunities constrained as pressures on Greek household spending are amplified by an anachronistic and distorted domestic pharmaceutical reimbursement structure. Regressive funding, under-the-table payments and the lack of universal healthcare administration have allowed numerous intermediaries to operate throughout the Greek pharmaceutical value chain, thus ...
Greece Real Estate
BMI View: With the Greek economy back on track for growth, we expect an improvement of the wider macroeconomic situation to also support a recovery of the commercial real estate market. Although there are several positive indicators especially for the office and retail real estate segments, the economic recovery remains highly fragile and uncertainty continues to dominate the market atmosphere. We therefore expect rental rates to remain largely stable with slight positive trends in the abovementioned two sectors, while the demand for industrial real estate space will remain subdued as the Greek industry continues to struggle.
The commercial real estate sector closely mirrors the general economic trends of the country and as such has suffered significantly in the Greek economic crisis. Hopes are raised as 2014 is expected to be the first year...
BMI View: After a surge in wind capacity installation rates during 2013 we expect to see a slowdown in the Greek wind market and wider non-hydro renewables industry. Recent project announcements highlight that the wind sector will continue to expand in future, but at a much slower rate - in line with the changes made to the Greece renewables policy, under the New Deal earlier in 2014.
Measures to address the deficit of the country's power regulator LAGIE's deficit (which funds renewable energy), under the New Deal, introduced in April 2014, included reduction of FiTs, most steeply for solar photovoltaic (PV) plants, an increase to the renewables levy charged to all consumers (residential, commercial and industrial) and caped to annual installations of...
Ports Still Partially Decoupled From A Struggling Economy
Greece's outward-looking shipping sector continues to do better than the still-struggling economy. European transit freight demand plays an important part in determining overall activity levels, as does investment in port facilities. Because of this, the port of Piraeus has been able to show year-on-year (y-o-y) gains in both tonnage and container traffic since 2011. Our box traffic growth forecast for 2015 is a healthy 17% (down from an estimated 25.0% in 2014). The Port of Thessaloniki, which has lacked the benefits of large new investment, has in recent years followed a rather more volatile path with some quite sharp contractions in volume. In 2015 we expect a year of moderate growth at Thessaloniki.
The Greek economy is recovering, but the transition seems to be from deep recession to weak growth with continuing downside risks. We now...
BMI View : The challenging Greek telecoms climate eased noticeably in the second quarter of 2014 as take-up of wireline broadband services drove customer and revenue growth at key operators such as OTE , Hellas Online (HOL) and ForthNet . In part, this is due to the wider availability of OTE's VDSL network, which alternative operators are now tapping into and making it easier for consumers to access subscription video services. The incumbent's pay-TV business still is not growing as quickly as it might like, provoking it to table an offer for ForthNet's Nova TV platform. In response, Vodafone and WIND ...
With Greece estimated to have finally returned to economic growth in 2014, the outlook for 2015-2018 is looking relatively positive, especially as tourist arrivals are set to increase healthily over this period, drawn by low prices and an established product. However, lower prices make investment in the industry less attractive in the short term and the possible introduction of higher hotel rates in 2015 will further squeeze profitability for international investors.
Greece's wealth of natural, archaeological and cultural attractions have made it one of Europe's most popular destinations for decades. The flow of tourists was reduced abruptly as a result of the political unrest relating to two consecutive EU bailouts and austerity programmes as recently as 2012. However, with political and economy stability in Greece finally re-establishing themselves, BMI expects to see an upsurge in tourist arrivals between 2015 and...