Hit by the recession in 2015, Greece should manage to get back on track in the second quarter of 2016, according to an economic insight report by Euler Hermes. Here are the 3 factors conducive to recovery in the eyes of the trade credit insurance company, provided, however, that capital controls are significantly tempered between now and then.
A positive scenario for the 2017 horizon. In its economic insight report just published, Euler Hermes believes that Greece should get back on the path to economic growth after a period of recession in 2015 (negative growth of -0.3%). According to Euler Hermes’ scenario, a positive review by the “Troika” between now and the end of March should lead to measures that will temper capital controls, in particular concerning businesses. Negotiations may also take place on the possible efforts for reducing Greek debt by European countries. This would encourage not only the confidence of Greece itself, but also that of foreign investors.
3 opportunities for a recovery in trade. If these macro-economic lights go back to green, Euler Hermes identifies 3 economic opportunities capable of stimulating Greek trade:
- Increased logistical capacities. An increase in Greece’s logistical capacities should drive the country’s import/export activity, reckons the trade credit insurance company. The flagship undertaking in this respect is the privatisation of the port of Piraeus, sold to Chinese giant Cosco. In addition, investment projects with a value of some €350 million are planned over the next five years. This should open up new import/exports prospects for Greece, in particular with Asia. Greece could then contend with Mediterranean competition and capitalise on its advantageous geographic position. The Piraeus port is also stepping up its cruise activity, in particular with American cruise company Carnival which has chosen this port as a stopover for its Mediterranean cruises.
2. The return of Iran. Iran’s return to world trade should stimulate demand for Greek exporters, according to Euler Hermes (see our article Iran: 3 growth sectors for European SMEs). The partial lifting of international sanctions on Iran should have a significant impact on trade between these two countries. Iranian imports are expected to increase by 20% in 2016, and by a further 13% in 2017. Greek exporters would thus see new prospects open up in Iran in the automotive, food, metals, machines and equipment industries. In fact, before the international sanctions on Iran, Greek refineries already accounted for a large share of Iranian crude oil purchases (equivalent to 26% of all Greece’s crude oil imports).
3. Tourism. Representing 8% of the country’s GDP in 2015 with more than 26 million visitors, tourism still represents one of Greece’s key assets in terms of economic growth. While it can count on traditional tourists from Northern Europe (France, Germany, Netherlands, United Kingdom) and other EU member countries (such as Italy), Greece is also an increasingly popular destination for newcomers (Bulgaria, Poland, Romania).
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