Capital Link Invest In Greece Webinar Series
New York, Thursday, June 20, 2024 – Capital Link held on Tuesday, June 18, 2024, the second installment of this webinar series, which aim to update the international community and raise the profile of Greece as a business and investment destination. The topic was “Greek Economy: Prospects & Outlook Post Investment Upgrade”.
Key Speakers and Panelists:
Moderator:
Mr. George Papadimitriou, Partner, Accounts & Markets Leader, Central, Eastern & Southeastern Europe & Central Asia – EY
Panelists:
- Mr. Michael Arghyrou , Head of the Council of Economic Advisers – Hellenic Republic
- Dr. Tassos Anastasatos , Group Chief Economist, Deputy General Manager – Eurobank
- Dr. Ilias Lekkos , Chief Economist – Piraeus Bank
- Mr. Frank Gill , Managing Director, EMEA Lead Sovereign Analyst – S&P Global Ratings
Main Discussion Points:
Reasons to Invest in Greece
- High expected profitability and low economic risk.
- Low political risk with a pro-growth and reform-friendly government.
- Significant capital inflows from the EU expected until the end of the decade.
- Strong momentum in the Greek stock market.
- Commitment to the geopolitical alliance of the EU/West.
Investment Grade Milestone:
- The recovery of Greece’s investment grade is a significant achievement but not the final goal. Important reforms need to be accelerated.
Economic Growth Projections:
- Greece is expected to grow at 2.2% in 2024, significantly higher than the Eurozone’s 0.8%.
- Unemployment is decreasing, and inflation is lower than in 2023, though further reduction remains challenging.
Debt and Borrowing Costs:
- Greece’s debt ratio is the highest in the EU at 162% of GDP, down from 206% in 2020. Greece has recorded the largest decrease internationally, of the order of 45%, while the cost of borrowing
- Significant debt reduction and lower borrowing costs have been achieved despite global economic challenges due to strong growth and to the rapid return to primary surpluses.
Investment Growth:
- Real investment volume in Greece has increased by 41% since 2019.
Challenges:
- Persistent issues include low productivity, demographic challenges, and the need for reforms in the judicial system, land registry, education, health system, and labor force participation.
Banking Sector:
- Greek banks have addressed non-performing exposures (NPEs) and now have strong capital adequacy ratios and liquidity.
- Future challenges include maintaining profitability through growth models that involve overseas operations and fee income.
Strategic Recommendations:
- Emphasizing the need for Greece to achieve higher growth rates and overcome risk aversion in businesses and households.
- Frank Gill of S&P recommended that Greece follow the examples of Ireland, Portugal, and Cyprus by recording budget surpluses to signal market confidence and further reduce nominal debt.
Conclusion:
- The panel highlighted both the progress made and the challenges ahead for Greece’s economy. The investment grade upgrade is a positive step, but continued reforms and strategic investments are crucial for sustained growth and stability
Watch Replay
The recovery of the investment grade strengthens Greece’s prospects, however the challenges facing the Greek economy remain, as noted in the webinar by Capital Link, through which the rating agency S&P also sent a message to the Greek government to take the example of Ireland, Portugal and Cyprus on the general government deficit to send a strong signal to the markets.
In more detail, as noted by Georgios Papadimitriou, Partner, Accounts & Markets Leader, Central, Eastern & Southeastern Europe & Central Asia at EY, who moderated the panel, the investment grade is an important milestone, but it is not the end of the road for the country as there are many and important reforms that need to be accelerated.
Mr. Michael Arghyrou, Head of the Council of Economic Advisers of the Hellenic Republic, proceeded with a brief presentation of the Greek economy, pointing out that Greece is expected to continue recording strong growth rates which will be significantly higher than the Eurozone, with 2024 expected to close with growth at 2.2% against 0.8% for the eurozone. Also, unemployment continues to fall while inflation is significantly lower than in 2023 – although the last mile in reducing it is also the hardest, he pointed out.
At the same time, he said that although Greece’s debt ratio is the highest in the EU, at 162% of GDP in 2023, the progress that has been made since 2020 and the 206% of GDP that was then, is significant, with the country having recorded the largest decrease internationally, of the order of 45%, while the cost of borrowing has also been significantly de-escalated despite the environment of high international inflation, high interest rates and uncertainty. This was possible due to strong growth but also thanks to the rapid return to primary surpluses, as Mr. Arghyrou said.
In addition, he noted that although the investment gap caused by the crisis remains, it is nevertheless important that the volume of real investments in Greece has increased by 41% since 2019. Mr. Arghyrou highlighted five reasons to invest in Greece: 1) the unique combination of high expected profitability and low economic risk, 2) the very low political risk with a growth, market and reform friendly government, 3) the very large capital inflows from the EU that are expected until the end of the decade, 4) the strong momentum of the Greek stock market and 5) the fact that Greece is committed to the geopolitical alliance of the EU / the West.
However, Mr. Arghyrou also referred to the challenges of the Greek economy such as the low level of productivity which in order to recover needs investments, as well as the demographics, while he emphasized that important reforms remain such as the judicial system, the land registry, education, the health system , the expansion of labor force participation.
For his part, Mr. Ilias Lekkos, Chief Economist at Piraeus Bank, emphasized the need for Greece to achieve higher growth. The Greek economy may be growing at higher rates compared to the Eurozone and may have many positive catalysts such as EU resources and the significant improvement of banks, however it does not seem to be able to move on a trajectory of higher growth rates in the region as well of 3% from 2% in the current period. This according to Mr. Lekkos is due to the continued risk aversion observed by businesses and households due to the lack of credit growth.
Mr. Tasos Anastasatos, Group Chief Economist, Deputy General Manager at Eurobank, spoke about the climate prevailing among analysts and investors towards Greece, stressing that there is optimism, and this is justified by the significant progress recorded by the Greek economy, having left behind the legacy of the crisis and following a path fiscal prudence, with political stability and growth.
Mr. Anastasatos emphasized, however, that Greece must seize the opportunity it has in the next 3-5 years to change its economic model. And the “key” to this is the attraction of investment, driven by the implementation of the necessary disruptive reforms.
Responding to a question about the challenges of Greek banks, the economist pointed out that, the issue of NPEs has been dealt with and Greek banks enjoy comfortable capital adequacy ratios and ample liquidity to finance growth. A challenge going forward for the industry is to be able to post healthy profitability now that peak net interest income is behind us, inter alia via a model of growth which embodies more contributions from overseas operations and fee income. This would also help in reducing the share of deferred taxation in its capital (DTCs).
Mr. Frank Gill, Managing Director, EMEA Lead Sovereign Analyst at S&P Global Ratings, however, urged the Greek government to follow the examples of Ireland, Portugal and Cyprus and try to record budget surpluses. As he characteristically said, although Greece is estimated by S&P to record primary surpluses of the order of 2% in the coming years, S&P also predicts that small nominal deficits of the general government will also be recorded.
“Perhaps, and as a signal for the markets, the way Ireland, Portugal and Cyprus have managed to record budget surpluses now, is something that the Greek government should also do, and reduce and its nominal debt, in the medium term,” the analyst said.
Forward-Looking Statements
Capital Link’s webinars, podcasts, and presentations may contain “forward-looking statements.” Statements that are predictive, that depend upon or refer to future events or conditions, or that include words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “estimates,” “projects,” “forecasts,” “may,” “will,” “should” and similar expressions are forward-looking statements. These statements are not historical facts but instead represent only the beliefs of each participating Company regarding future results, many of which, in their nature, are inherently uncertain and outside of the control of the Companies. Actual results may differ, possibly materially, from those anticipated in these forward-looking statements. For more information about risks and uncertainties associated with the participating companies, please refer to the regulatory filings of each participating company with the SEC.
Capital Link – Disclaimer
Founded in 1995, Capital Link provides Investor & Public Relations and Media services to several listed and private companies, including companies featured in these webinars, podcasts, and presentations. All these, including the one mentioned above, are for informational and educational purposes and should not be relied upon. They do not constitute an offer to buy or sell securities or investment advice or advice of any kind. The views expressed are not those of Capital Link, which bears no responsibility for them. In addition, Capital Link organizes a series of industry and investment conferences annually in key industry centers in the United States, Europe, and Asia, all of which are known for combining rich educational and informational content with unique marketing and networking opportunities. Capital Link is a member of the Baltic Exchange. Based in New York City, Capital Link has a presence in London, Athens & Oslo. For additional information please visit: www.capitallink.com.
