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Greek Economic Bulletin - Updated October 5th 2020

The impact of the pandemic continues to filter through to the economy, however a major investment in cloud computing and an ambitious masterplan for the green transition hint at a dynamic post-Covid recovery.

COVID-19 measures

With infection rates in Greece remaining high, the cost of a second lockdown affecting Athens is at the front of policy makers’ minds. According to Finance Minister Christos Staikouras, data from spring shows that a monthly lockdown costs 3% of GDP. Economists think that any lockdown of more than two weeks will be hard for the economy to bear. Bank of Greece Governor Yannis Stournaras expects it to further delay the recovery, while Deputy Finance Minister Theodoros Skylakakis expects it to add another 2 percentage points to the recession and have a significant fiscal impact.


Greece’s Manufacturing Purchasing Managers’ Index (PMI) rose to 50 points in September from 49.4 points in August, marking the highest reading since February, prior to the start of the lockdown. Production has stabilised and employment increased, although sales continue to fall, albeit at a slower pace than previous months.

Economic sentiment, as tracked by the European Commission, dropped by 1.2 points month-on-month in September to 89.5 points. Consumer confidence deteriorated by 6 points month-on-month to -41, while industry confidence fell by 2.6 points to -18.1 points.

Greece’s Retail Sales Index declined by -3% in July, marking the fifth consecutive negative reading in as many months, according to data from the Hellenic Statistical Authority (ELSTAT).


Greece continues to build its cash reserves at historically low costs. The Public Debt Management Agency (PDMA) raised €487.5 million through the auction of 26-week treasury bills at a uniform yield of -0.10%, a record low yield for this maturity even prior to the pandemic.


Greek banks expect new bad loans due to the pandemic to reach €5 billion, down from initial estimates of €10 billion. According to their submission to the ECB’s Single Supervisory Mechanism, the banks plan to reduce their NPE ratio to 20% by the end of 2022, from 40% where it stood at the end of 2019.

The Bank of Greece has published its proposals for the creation of an Asset Management Company (AMC) to relieve bank balance sheets of bad loan burdens. The so-called “bad bank” is designed to take on loans worth up to a total €45 billion on a voluntary basis, which it will then securitise, selling at least 50% of the senior notes to investors. The transfer of the bad loans will take place at net book value and the banks will take bonds in exchange. Its creation will be combined with the reduction of deferred tax assets of €15.5 billion, which constitute a significant share of Greek banks’ capital.

Green economy

National Bank of Greece raised €500 million via a pioneering green bond issue, the first of its kind for a Greek lender, and the first high-guarantee bond by a Greek bank since 2015. The issue attracted bids totalling €1.2 billion, closing with a coupon of 2.75% and a yield of 2.875%.

The Energy Ministry launched a public consultation on the Just Development Masterplan for the former coal-burning regions of Western Macedonia and Megalopolis. The plan, which has already attracted more than 70 proposals from private developers, will be supported by €5 billion of state and EU funding. Clean energy, industry, manufacturing and commerce, smart farming, sustainable tourism, technology and education will be the sectors targeted for a boost, as lignite is phased out over the next seven years.


Traffic at Greek airports was down by -65% in the third quarter of 2020 compared to the same period in 2019, marking an improvement on the previous quarter when the reduction ranged from -99% in April to -95% in June.

Aegean Airlines suffered losses of €201 million in the first half of 2020, as flights in the second quarter were reduced by -82% and passenger traffic dropped by -92%. Revenue was down by 64%.

Travel company TUI has extended its booking season for Greece into November, in response to strong demand for Greek holidays. The company is also eyeing an early start to the next season in mid-March to coincide with Easter holidays.


Microsoft will be investing close to €1 billion in cloud service infrastructure in Greece, according to press reports. The landmark investment was developed in cooperation with the Greek government and is due to be launched officially in the coming week.


The Hellinikon project is expected to have a positive effect not only on Athens but on the entire country as well.

The final legal hurdles are being cleared for construction to start on the Hellinikon redevelopment project in the first quarter of 2021. After the Council of State rejected an appeal by Hard Rock International, effectively granting the casino license to Mohegan, the court will hear this month three of the four outstanding appeals related to the land allocation on the site, while a decision is pending on the fourth.


The interest in the ports of Alexandroupoli, Kavala and Igoumenitsa is such that privatisation agency HRADF had to satisfy a request from investors to extend the deadline for Alexandroupoli, initially set for October 2, by up to four weeks. For Alexandroupoli, and possibly Kavala, there is strong interest by U.S. bidders, with U.S. Secretary of State Mike Pompeo giving strong backing to the project during his visit to Greece. However, two Greek consortia are also expected to place bids. Greek-Russian tycoon Ivan Savvides, through the Port of Thessaloniki, might place bids for Alexandroupoli or Kavala. For Igoumenitsa, the race will likely be between the Grimaldi Group and Attica Group, while there is also the prospect of German participation.

Stock market

The ASE general index rose by 1.25% on a weekly basis to settle at 625.67 points, with the lingering threat of a second lockdown in Athens continuing to suppress investor appetite. Large caps gained 0.89%, while banking stocks fell by -0.68%.



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