Note On The Greek Economy

NOTE ON THE GREEK ECONOMY
September 15, 2017
Bank of Greece
Economic Analysis and Research Department
Recent Economic Developments
 On 7 September, the ELA ceiling for Greek banks declined by €5.0 bn to €33.9 bn, reflecting
developments in the liquidity conditions of Greek banks. The ceiling has fallen by €56.1 bn from its
peak in July 2015 of €90 bn.
 Industrial production increased by 1.7% y-o-y in July for the tenth consecutive month mainly due to the
performance of manufacturing (1.3% y-o-y) and electricity production (3.8% y-o-y). In the first seven
months of the year industrial production increased by 5.3% y-o-y.
 HICP headline and underline inflation measures retreated to 0.6% and 0.4% y-o-y respectively in
August 2017 from 0.9% y-o-y in July, mainly as a result of a considerable decline in transport services
prices due to base effects.
 Dependent employment net flows in the private sector decreased by 14,402 jobs in August 2017
compared to 16,128 in August 2016, mainly due to dismissals in tourist-oriented sectors.
 Employment grew by 2.4% y-o-y in 2017:Q2, contributing to the decline in the number of unemployed
by 8.6% y-o-y.
 The (sa) unemployment rate in June 2017 dropped to 21.2%, 2.2 pp less than in December 2016.
 Greek Government Bond yields fell somewhat in the last two weeks, while the slope of the yield curve
steepened, implying improved investor perceptions for the outlook of the Greek economy.
 Greek corporate bond yields also fell somewhat, despite a rise in other euro-area corporate bond
yields; share prices on the Athens Exchange by contrast continued on a downward path, driven lower
mainly by bank shares.
 In January-July 2017, the general government cash primary surplus remained broadly stable at 2.3% of
GDP compared to the same period last year, reflecting primarily lower direct tax revenue as well as EU
receipts and a negative base effect from the ENFIA instalment schedule compensated by higher social
security contributions and privatization revenue as well as lower primary expenditure (mainly
pensions). After declining in the second half of 2016 to €4.8 bn, general government arrears increased
in the first seven months of 2017 t0 around €5.4 bn.
 In January-August 2017, the state budget recorded a deficit of 0.7% of GDP, compared to a deficit of
1.5% of GDP during the same period last year. The primary balance was in line with the period target
due to the containement of ordinary primary expenditure (by €1.2 bn) as well as public investment
expenditure (by €0.5 bn) that compensated for ordinary revenue shortfall (by €0.9 bn), lower
privatization revenue (by €0.3 bn) as well as higher tax refunds (by €0.5 bn). The large deviation of
ordinary revenue from the period target largely reflects the one month delay in the payment of the
first instalment of the property tax (€1 bn).
www.bankofgreece.gr
SUMMARY OF ECONOMIC DEVELOPMENTS AND OUTLOOK
 Following stagnation in 2015-2016, GDP growth moved into expansionary territory in 2017:Q1 and
further increased in 2017:Q2 shaping a positive outlook for the year as a whole.
 Recent soft data indicate a rebound in confidence following the conclusion of the second review and
the return of Greece to international capital markets:
 The Manufacturing PMI has been in expansionary territory in the last three months; notably, in
August PMI reached a 8-year high. Driving the improvement was a significant rise in output and
new orders as well as a resurgence in external demand. The employment sub-index reached a
fifteen-year high, suggesting strong employment dynamics.
 Economic sentiment further increased in August on the back of an improvement in consumer
confidence which reached a two-year high, as well as increased business expectations in the
services sector.
 Financial indicators: sovereign bond yields, yields on bonds issued by non-financial corporations
and share prices improved in 2017:Q2. The completion of the second review sparked a sharp drop in
government bond yields to late-2009 levels. Corporate bond yields have also fallen to historically low
levels, while shares of companies listed on the Athens stock exchange have posted strong returns in
the year-to-date.
 Economic activity stagnated in 2016 but moved into expansionary territory in 2017:H1 with real
GDP rising by 0.6% y-o-y. Following the rebound of economic activity in 2017:Q1 (0.4% y-o-y), real
GDP further increased by 0.8% y-o-y in 2017:Q2. The positive drivers of GDP growth in 2017:Q2 were
exports of goods and services (9.5% y-o-y), government consumption (3.3% y-o-y) and private
consumption (0.7% y-o-y), while gross fixed capital formation declined (-4.6% y-o-y) mainly due to the
significant fall in disbursements from the Public Investment Programme (PIP).
 The major strengths of the evolving recovery are improved export dynamics, exceptional
performance of industrial production and the labour market recovery.
 During the first six months of 2017 real exports of goods increased by 5.8% y-o-y and travel
receipts, at constant prices, rose by 6.1% y-o-y. Receipts from shipping increased by 21.0% y-o-y.
 Industrial Production has been expanding at healthy rates since mid-2015. The rebound is largely
driven by increasing exports as companies benefited from the decline in wages and improved
competitiveness in international markets. Industrial production performed exceptionally well in the first
seven months of 2017 (5.3% y-o-y), mainly due to the performance of manufacturing (3.8% y-o-y) and
electricity (12.2% y-o-y).
 Employment has been growing at healthy rates since mid-2014 despite the stagnation of economic
activity. The rebound is largely driven by higher job-market flexibility due to past structural reforms.
 Over the past three years the private sector has been creating on average more than 100,000
new jobs per year. Net employment flows until August 2017 are even stronger than in 2016, mainly
due to stronger growth in the tourist industry. Net inflows continue to rely more on flexible forms of
employment, which accounted for 52.4% of new hirings.
 Flow imbalances have been eliminated: The primary fiscal balance as a percentage of GDP has
improved by about 14 pp since the beginning of the sovereign debt crisis. The 2016 primary fiscal
outcome (programme definition) recorded a surplus of 4.2% of GDP, outperforming significantly the
target of 0.5% of GDP. The improvement reflects strong revenue performance as well as spending
containment, partly on the back of temporary factors that are expected to unwind in 2017. For 2017 it
is projected that the primary balance target of 1.75% of GDP will be reached with a safe margin.
 The current account deficit as a percentage of GDP has fallen by 15 pp since the beginning of the
crisis, with the current account effectively being in balance over the last two years.
 Over recent years, Greece has benefited significantly from improved competitiveness. In part,
this development reflects the effect of structural reforms in the labour market, with wage bargaining
becoming more flexible. As a result, the cumulative loss in labour cost competitiveness recorded
between 2000 and 2009 has been recovered. Improvements in price competitiveness are also evident
and faster increases in the prices of tradeables relative to nontradeables provide incentives for
producers to move into tradeable sectors.
 Openness has improved substantially. Exports of goods and services excluding the shipping sector
have increased by 41% in real terms since their trough in 2009. The share of total exports in GDP
increased from 19.0% in 2009 to 30.2% in 2016.
 Qualitative indices reflecting the business environment suggest that Greece is still ranked relatively
low. However, it is the country with some of the largest improvements in recent years. Policy should
continue to put further emphasis on improving non-price competitiveness.
 The combination of higher crude oil prices in conjunction with the latest tax hikes in automobile fuel,
tobacco, coffee and telecommunications have offset remaining deflationary pressures evident in non-
energy industrial goods and have driven HICP inflation well into positive territory where it is expected
to remain in 2017.
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 Looking forward, the BoG expects GDP to grow by 1.6%, 2.4% and 2.7% in 2017, 2018 and 2019,
respectively (see Table 3).
 Risks to the projections: Downside risks exist related to the impact of increased taxation on
economic activity and reform implementation. Downside risks connected with the international
environment include the rise in protectionism worldwide and a possible resurgence of the refugee
crisis. Upside risks are related to the inclusion of Greek sovereign debt in the ECB’s quantitative
easing programme (QE) and a stronger than projected fiscal stimulus in 2017 following the
overperformance of the primary balance in 2016.
 Taking a longer-term perspective, rebalancing of the Greek economy is on-going, in spite of its
stalling in the second half of 2014 and into 2015.
 Whilst flow imbalances have been eliminated, the reduction of these imbalances has come at a high
cost. Real GDP is now more than a quarter down on its pre-crisis levels.
 Additionally, large imbalances still remain. Unemployment, though falling, is high (21.2% in June).
The general government debt to GDP ratio has risen substantially – in 2009, it stood at 126.7%; it
reached 179.0% of GDP at end-2016. Indebtedness of the private sector has generated significant
NPLs which are hampering banks’ ability to support recovery through the granting of new credit.
Finally, a rebalancing between private consumption (which stands at 70% of GDP) and investment
(11% of GDP) is required if future growth is to prove more sustainable.
 Domestic saving is insufficient to meet the investment needs of the Greek economy which, after
a long period of very low investment rates, are significant. Thus, the restoration of normal bank credit
conditions with the resolution of NPLs along with renewed access of companies to capital markets is
necessary. Additionally, full use should be made of both EU Structural Funds and financial resources
provided by the EIB, EIF and the Hellenic Fund for Enterprise and Development. Finally, conditions
should be encouraged that will attract foreign capital, notably in the form of FDI, which will provide
both the necessary additional funds to finance investment plus valuable know-how, contributing thus
to the re-orientation of domestic production towards exports.
 The MoU, signed between the EC and Greece on 19 August 2015, envisages ESM financing of up to
€86 bn over the three years 2015-18. The MoU places emphasis on four pillars: (i) the restoration of
fiscal sustainability; (ii) the safeguarding of financial stability; (iii) the implementation of structural
policies to enhance competitiveness and growth; and (iv) the modernisation of the state and public
administration.
 In line with these pillars, most structural and fiscal reforms agreed have been legislated and
include inter alia: pension and income tax reform, indirect taxation, the NPL strategy, privatizations
and an automatic contingent fiscal correction mechanism, the enhancement of electronic payments as
well as the release of the MTFS 2018-2021.
 Programme reviews: Following the positive assessment of the programme implementation in May
2016, the first review of the new programme was completed in October 2016. The second review was
completed in June 2017.
 Financing: The first tranche of the new programme amounted tο €16 bn and was gradually disbursed
by the ESM in 2015. Another €5.4 bn were disbursed in December 2015 for bank recapitalization
costs. The second tranche of €10.3 bn was gradually disbursed in 2016, of which €3.5 bn was for
arrears clearance. The third tranche of €8.5 bn (€1.6 bn of which is for arrears clearance) was
approved in July 2017 and is gradually being disbursed starting with €7.7 bn (€0.8 bn of which is for
arrears clearance). In July Greece returned to global capital markets after three years, raising €3 bn
(yield: 4.625%; annual coupon rate: 4.375%).
 Debt relief measures: the Eurogroup on 24 May 2016 agreed to a package of short-term debt relief
measures to be phased in progressively and subject to the pre-defined conditionality of the ESM
programme. Subsequently, on 23 January 2017, the ESM adopted a set of short-term debt relief
measures designed to reduce interest rate risk for Greece and to ease the country’s repayment
profile. Finally, the Eurogroup of 15 June 2017 reconfirmed the commitments and principles
contained in the May 2016 statement as regards the sustainability of Greek public debt. Specific
mention was made to a possible deferral of EFSF interest and amortization by up to 15 years in the
context of the medium-term measures. Additionally a growth-adjustment mechanism is envisaged to
correct for differences between assumed and actual growth rates after 2018. The primary surplus
target of 3.5% of GDP for the years 2019-2022 will be reduced to equal to or above but close to 2% of
GDP during 2023-2060.
 The BoG published a proposal for debt relief in its monetary policy report in June 2017 which is
based on a combination of extensions of maturities, smoothing of interest payments over time (which
increase substantially after 2021 due to deferred interest payments on EFSF loans) and lowering the
primary surplus target to 2% of GDP (from 3.5%) after 2020. The proposal provides an indication that
even mild debt relief measures could render debt sustainable.
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LAST TWO WEEKS’ NEWS AND DATA RELEASES (04 - 15 September 2017)
Real Economy
 07/09/2017: ELSTAT released Labour Force Survey results for June 2017.
 07/09/2017: Labour market legislation providing increased worker protection and monitoring against
undeclared labour was voted into law. The bill has also provisions relating to the implementation of the
new social insurance system.
 08/09/2017: ELSTAT released HICP for August 2017.
 08/09/2017: ELSTAT released Industrial Production Index for July 2017.
 08/09/2017: ELSTAT released Turnover Indices in Information and Communication and Turnover
Indices in Transport for 2017:Q2.
 11/09/2017: ELSTAT released Index of Wages of the Whole Economy for 2017:Q2.
 11/09/2017: ELSTAT released Motor Vehicle Circulation Licences for August 2017.
 12/09/2017: ELSTAT released Building Activity for June 2017.
 13/09/2017: ELSTAT released Production Index in Construction for 2017:Q2.
 13/09/2017: ELSTAT released Turnover Index in Accommodation and Food Service Activities for
2017:Q2.
 13/09/2017: Ministry of Labour released the Ergani survey on business sector employment flows in
August 2017.
 14/09/2017: ELSTAT released Import Price Index in Industry for July 2017.
 14/09/2017: ELSTAT released Labour Force Survey results for 2017:Q2.
 15/09/2017: ELSTAT released Turnover Indices for Specific Activities of the Services Sector for
2017:Q2.
External Sector
 07/09/2017: ELSTAT released merchandise trade data for July 2017.
Monetary & Financial

 6/9/2017: Fitch Ratings, following the upgrade of Greece's Long-Term Foreign-Currency Issuer
Default Rating (IDR) to “B-”, upgraded the Long-Term ratings on Eurobank's and NBG's government-
guaranteed debt programmes to 'B-' from 'CCC'.
Fiscal
 05/09/2017: MoF, general government cash balance for January-July 2017.
 14/09/2017: MoF, state budget execution for January-August 2017 (preliminary data).
NEXT TWO WEEKS’ NEWS AND DATA RELEASES (18 - 29 September 2017)
Real Economy
 19/09/2017: ELSTAT releases Turnover Index in Industry for July 2017.
 28/09/2017: ELSTAT releases Services Producer Price Indices for 2017:Q2.
 28/09/2017: European Commission releases Economic Sentiment Indicator for September 2017.
 29/09/2017: ELSTAT releases Producer Price Index in Industry for August 2017.
 29/09/2017: ELSTAT releases Turnover Index in Retail Trade for July 2017.
External Sector
 20/09/2017: BoG releases Balance of Payments data for July 2017.
Monetary & Financial

 27/09/2017: ECB releases data on monetary developments in the euro area (incl.Greece) for August
2017.
Fiscal
 24/09/2017: MoF, state budget execution for January-August 2017 (final data).
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BACKGROUND INFORMATION
1. OUTPUT, DEMAND AND CONJUNCTURAL INDICATORS
Medium-term trends and outlook

 Medium-term trends: Following stagnation in 2015-2016, economic activity moved into positive
territory in 2017:Q1 (0.4% y-o-y) and further expanded in the second quarter of 2017 (0.8% y-o-y),
shaping a positive outlook for the year as a whole.
 Looking forward, the BoG projects GDP to increase by 1.6%, 2.4% and 2.7% in 2017, 2018 and
2019, respectively (see Table 3).
Short-term developments
 ELSTAT’s provisional data (1/9, sa data) pointed to an increase in real GDP in 2017:Q2 (0.8% y-o-y,
0.5% q-o-q). The positive drivers of GDP growth were the increase in exports of goods and services
(+9.5% y-o-y) and the increase in public and private consumption (3.3% y-o-y and 0.7% y-o-y,
respectively). By contrast, gross fixed capital formation dropped (-4.6% y-o-y), mainly reflecting a
significant decline in disbursements from the Public Investment Programme.
 ELSTAT data show that the nominal disposable income of households and non-profit
institutions serving households (Chart 4) marginally declined by 0.1% y-o-y in 2017:Q1. Nominal
income before taxes and social contributions increased (1.3% y-o-y) due to a rise in dependent
employment and self-employed income, thus contributing positively to disposable income (1.3 pp). By
contrast, net social transfers had a negative contribution to disposable income (-2.8 pp), due to an
increase in social contributions (4.4% y-o-y) and a decline in social benefits (-5.0% y-o-y). Taxes on
income and wealth declined due to a base effect (-9.1% y-o-y); as a result total taxes had a positive
contribution to disposable income (+0.8 pp). Real disposable income of households and NPISH
declined by 1.6% y-o-y in 2017:Q1, while private consumption increased (1.6% y-o-y, nsa data)
reflecting further dissaving (-13.4%).
 Economic sentiment (ESI) further increased to 99.0 in August (from 98.2 in July – Chart 7), due to
improved consumer confidence which reached a two-year high and increased business expectations
in the services sector. The resurgence in confidence reflects the successful conclusion of the second
review and Greece’s return to international capital markets for the first time in three years. By contrast,
business expectations in manufacturing, retail trade and construction receded.
 Employment plans in August improved in manufacturing and the services sector, while they
deteriorated in retail trade and construction. Consumers expect slightly higher unemployment over the
next 12 months (45.2, from 44.1 in July).
 Retail sales volume increased in June (3.9% y-o-y, from 0.3% y-o-y in May), with seasonally
adjusted data also pointing to an increase of 2.5% m-o-m. Retail sales volume excluding automotive
fuel also posted an increase of 4.3% y-o-y. All the sub-categories of the index increased: “food,
beverages & tobacco” (1.0% y-o-y), “clothing & footwear” (9.0% y-o-y), “furniture - electrical and
household equipment” (14.2% y-o-y) and “books, stationery & other goods” (11.8% y-o-y). Retail sales
volume increased in the first six months of 2017 by 2.4% y-o-y.
 New private passenger car registrations further increased in August by 37.7% y-o-y and by 20.6%
y-o-y in the first eight months of the year.
 On the supply side, manufacturing PMI reached a 8-year high in August (52.2, from 50.5 in July)
signaling strong growth in the Greek manufacturing sector. The exceptional rise in output (52.8, from
51.3 in July) and the significant increase in new orders (52.2, from 50.0 in July) and new export orders
(51.1, from 49.5 in July) drove the improvement. The employment sub-index suggested marked job
creation in the manufacturing sector reaching a 15-year high (53.3, from 51.7 in July).
 Manufacturing production increased in July by 1.3% y-o-y, from 3.0% y-o-y in June. Manufacturing
increased by 3.8% y-o-y in the first seven months of the year, mainly driven by the rise in coke and
refined petroleum products (8.7% y-o-y), basic metals (24.3% y-o-y) and basic pharmaceutical
products (11.8% y-o-y).
 Industrial production increased in July (1.7% y-o-y, from 1.8% in June) for the tenth consecutive
month due to the performance of manufacturing (1.3% y-o-y) and electricity production (3.8% y-o-y).
Mining and quarrying production increased (2.5% y-o-y) mainly due to a base effect, while water
supply declined (-5.0% y-o-y). Since the start of the year, industrial production has increased by 5.3%
y-o-y.
 The volume of building permits issued increased by 25.1% y-o-y in June and by 24% in the first six
months 2017.
 The share of services in total gross value added rose to 82% in 2016, higher than the 2001-2008
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average (74%). A trend visible since 2012 is the increase in the share of tradable services related to
tourism. Sectors related to tourism are estimated to have increased their share in gross value added
from 10.5% in 2012 to 12.4% in 2015.
 Output in the service sector (as measured by gross value added) stabilised in 2017:H1. Notably,
over the same period, turnover indices in motor trade, wholesale trade, accommodation & food service
activities and telecommunications increased by 3.1%, 4.9%, 5.4% and 0.4% y-o-y, respectively. In the
transport sector, turnover indices increased in land and air transport (6.7% and 1.2% y-o-y,
respectively), but declined in water transport (-12.1% y-o-y).
 Tourist arrivals in June, based on the BoG's Frontier Travel Survey, increased by 13% y-o-y,
following an increase in arrivals from EU-28 and non-EU countries by 10% and 20%, respectively.
Tourist arrivals rose by 6.6% y-o-y in 2017:H1. International arrivals at Greek airports increased by
7.5% y-o-y in July (12% y-o-y in the period Jan.-July 2017), while international arrivals at Athens
International Airport increased by 10% y-o-y in August (12% y-o-y in the period Jan.-Aug. 2017).
 Travel receipts (at constant prices, excluding revenue from cruises) increased by 13.6% y-o-y in
June 2017. In 2017:H1, travel receipts (at constant prices) increased by 6.1% y-o-y, while the average
expenditure per journey marginally declined by 0.5% y-o-y (€468 vs €470 in the respective period of
2016). Notably, receipts (at current prices) from France, Germany and Russia rose by 17%, 15% and
11% y-o-y, respectively, while those from the US fell by 11% y-o-y.
2. PRIVATISATIONS AND STRUCTURAL REFORMS

 Given the poor results achieved in the privatisation programme, the Greek government agreed to
take all the actions pending in the field of privatisations. A new Privatization and Investment Fund,
officially called the Hellenic Corporation of Assets and Participations was established in 2016 to
manage valuable Greek assets and maximize their value through privatisations and other means. The
Supervisory Board and the Board of Directors were appointed and started working as from 16
February 2017, while the key internal regulations were adopted by the General Assembly. The Fund
also manages, via a new corporation (EDHS), state assets in several public corporations.
Furthermore, the Government Council of Economic Policy (KYSOIP) endorsed the revised Asset
Development Plan of the HRADF, which foresees the completion of all major ongoing projects (19) as
soon as possible.
 According to the Medium-Term Budgetary Framework 2018-2021, public revenues from
privatisations amounted to €494 mn in 2016. The forecast for 2017 is €2,153 mn mainly due to the
sale of the 14 regional airports (€1,234 mn). In addition, some public organisations sold their
participation in subsidiaries to foreign investors (e.g. National Bank of Greece sold 67% of shares of
Astir Palace Vouliagmeni in 2016, PPC sold 24% of shares of ADMIE in June 2017, National Bank of
Greece will finalise the sale of 75% of shares of Ethniki Insurance) for a total amount of €1,337 mn.
Thus, the aggregate privatisation revenues (public and private) amounted to €793 mn in 2016 and will
reach €3,191 mn in 2017.
 During 2011-2014 a number of structural reforms were legally enacted and implemented in the
product and the labour markets. Implementation was strong during 2011-2012, but slowed thereafter.
Reforms in the labour market have brought employment protection legislation in line with average EU
practices and created the framework for a decentralized wage setting system. Progress in lifting
regulatory restrictions for businesses has overall been slower.
 Reforms legally enacted or progressed during 2015-2017:H1 included interventions spanning across a
wide set of areas: social security and pension system (incl. a unified social security system), product
markets (further progress in energy markets liberalization; legislation of a number of outstanding
OECD Toolkit recommendations), labour markets (relaxation of earlier restrictions in collective
dismissals), public sector efficiency (new centralized procurement scheme) and transparency (new
rules for the funding of political parties). Initiatives improving the business environment notably
included:
 New investment incentives framework law ("Development Law"; L. 4399/2016) that inter alia
involves fast track procedures and a stable tax regime for large investment projects, and specifies
a minimum investment budget requirement for SME subsidies, new categories of subsidized
expenses and new financing instruments.
 Streamlining of investment licensing procedures by substituting ex ante licensing with ex post
monitoring for selected sectors: food and beverage manufacturing, tourist and entertainment
related activities.
 New Code of Civil Procedures and the establishment of a system for electronic auctions; new
bankruptcy code for households; revised corporate bankruptcy code (incl. “first start” provisions).
 Introduction of the NPL management framework; opening the market for selling loans.
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 A framework promoting electronic transactions to tackle tax evasion and corruption.
 On 14 September 2017, the final agreement for the sale of 100% stake in Trainose (Rail Operator) to
Ferrovie Dello Stato Italiane S.p.A. was signed on the sidelines of the 1st Hellenic - Italian Supreme
Cooperation Council.
 A revised out-of-court workout framework for corporate debt (L.4469/2017) provides an extended
scope of action (available to firms of any size and legal form, private and public debt obligations
exceeding €20,000) and streamlined procedures.
 The Supreme Labour Council is appointed responsible for coordinating and supervising the
implementation of the action plan to fight undeclared and under-declated labour. The plan inter alia
foresees the intensification of targeted controls and wage payments through bank transfers.
 Meeting the requirements for the second programme review, L. 4472/2017 (19 May 2017) includes a
wide set of reform initiatives, including inter alia:
 Labour markets: The need for prior approval of collective dismissals by the Ministry of Labour is
replaced by a notification procedure of maximum three months whose compliance with the law is
supervised by a Supreme Labour Council committee. Codification of the legislation for trade
union leave.
 Product markets: (i) implementation of a number of outstanding recommendations stemming from
OECD Toolkits I and III, notably including the liberalization of the over-the-counter prices and an
updated framework for Sunday trade in selected touristic and urban areas that extends its scope
of action (from May to October, covers shops of any type and size) subject to local authorities
approval; (ii) update of the action plan and NOME framework to meet with the targets of the
electricity market liberalization; 24% of ADMIE and 66% of DESFA to a strategic investor. There
is also staff agreement for the sale of 40% of the PPC lignite production.
 Business environment: (i) Code of Civil Procedure amendment and secondary legislation to
enable and support the implementation of electronic auctions; (ii) revised framework that further
streamlines bankruptcy procedures for small firms.
 Public sector efficiency and transparency: a new centralized procurement scheme and measures
to ensure the operation of new e-procurement facility.
 September 2017 legislation: (i) strengthens worker protection (also against unpaid work); (ii) facilitates
labour market participation of workers with disabilities; (iii) increases labour market monitoring against
undeclared and underdeclared labour with an emphasis on stricter fines. The new bill includes also
provisions relating to the implementation of the new social insurance system for public sector
employees, lawyers, engineers, farmers.
3. LABOUR MARKET AND COSTS

 Employment has been growing at healthy rates since mid-2014 despite the stagnation of economic
activity. Average employment growth increased by 1.7% and dependent employment by 3.1% in 2016.
However, it marked a slowdown compared to 2015 (2.1% and 3.7%, respectively). Meanwhile, the
number of unemployed declined by 5.5% (-6.1% in 2015), so that the unemployment rate fell further to
23.5% (24.9% in 2015).
 In 2017:H1, employment increased by 1.9% y-o-y (cf. 2.5% y-o-y in 2016:H1) and the number of
unemployed declined by 7.6% (cf. -5.9% y-o-y in 2016:H1). The unemployment rate in 2017:H1
dropped to 22.2% (cf. 24% in 2016:H1). The long-term unemployment rate declined to 72.0% (cf.
73.0% in 2016:H1), while the youth unemployment rate (in 20-29 age category) declined to 35.7% in
2017:H1 (cf. 38.7% in 2016:H1).
 Dependent employment flows in the private sector (Ministry of Labour ERGANI information
system) increased significantly in 2016. The net cumulative balance was positive by 136,260 new
jobs, exceeding the 2015 balance by 36,560 jobs. Both hirings and dismissals were higher on an
annual basis (by 18.4% and 17.4% y-o-y respectively) largely reflecting the seasonality of the tourist
sector. The share of part-time and intermittent jobs in 2016 accounted for 54.7% of new hirings,
somewhat reduced compared to a year ago (55.5% in 2015).
 According to non-financial accounts, compensation of employees increased by 2.9% on average in
2016 (-2.2% in 2015), reflecting an increase of 4.7% in the business sector and stability (+0.03%) in
the general government sector (2015: -2.7% and -1.4%, respectively). As the number of employees
increased by 2.1% in 2016 (ESA 2010), growth in compensation per employee was 0.8% (-2.9% in
2015), having turned positive for the first time since 2010. This trend continued into 2017:H1 and the
average annual growth in compensation of employees increased by 2.2% y-o-y. As the number of
7
employees increased by 1.5%, compensation per employee increased by 0.7% y-o-y (1.5% in
2016:H1).
 The ELSTAT Index of Wages for the total economy (excluding agriculture and private households,
nsa, non working-day-adjusted) shows an average increase by 1.3% y-o-y in hourly wages in 2016 (cf.
-0.9 y-o-y on average in 2015). In 2017:H1, average hourly wages marked a deceleration, growing by
0.8% y-o-y (cf. 2.6% in 2016:H1).
 The distribution of labour earnings in 2016 for those working under private-law contracts (ERGANI
annual report) continued to be compressed downward, as 50% of the workers earn a gross wage of
below €800 per month (similar to 2015). 22.5% of workers were paid for part-time or intermittent
employment in 2016 (cf. 22.4% in 2015), while 10.4% were in full-time jobs with gross earnings close
to the minimum wage (€600 per month or less) and 17.1% earned between €600 and €800 per month
(cf. 9.6% and 18%, respectively, in 2015).
 Labour productivity fell by 1.3% in 2016 (cf. -0.7% in 2015), as employment recovered more strongly
than activity (average growth by 1.3% (ESA 2010) and 0.0%, respectively). Hours worked per
employee also increased over the same period (2.4% y-o-y). In 2017:H1, labour productivity fell by
0.8% y-o-y (cf. -2.2% in 2016:H1), as total employment increased by 1.5%, while activity increased by
0.6% y-o-y in the same period.
 Unit Labour Costs (ULC) economy-wide increased by 2.1% in 2016 (cf. -2.2% in 2015), reflecting the
decline in labour productivity and the increase in compensation per employee. In 2017:H1, Unit
Labour Cost increased by 0.5% y-o-y.
 Firm-level collective agreements have gained pace compared to sectoral/occupational-level
agreements, following the change in the institutional framework in late 2011. In the 2012-2014 period,
1,671 such agreements were signed. Thereafter, during 2015-2016, 599 new agreements were
signed, the majority of which concerned wage freezes.
 Active Labour Market Policies (ALMPs) aimed at jobless households and young individuals rely on
EU funds and include: employment subsidies (including entrepreneurship subsidies), programmes
supporting work experience and/or training, and employment opportunities in public sector entities.
Some 400,000 unemployed were involved in ALMPs during 2015-2016 (27/08/2015 Ministry of Labour
bulletin, 16/06/2016 Supplementary MoU), while new programmes are ongoing in 2017.
 LFS quarterly data show an increase in employment growth by 2.4% y-o-y in 2017:Q2. The
unemployment rate declined to 21.1% in 2017:Q2, compared to 23.1% in 2016:Q2, as the number of
unemployed decreased by 8.6% y-o-y. Part-time employment increased marginally to 9.9% of
aggregate employment compared to 9.8% in 2016:Q2. Dependent employment increased by 2.7% y-
o-y compared to 3.9% in 2016:Q2, while self-employment increased by 1.5% y-o-y. The
unemployment rate declined by 1.7 pp for males (17.7% in 2017:Q2 compared to 19.4% in 2016:Q2),
and by 2.2 pp for females (25.4% in 2017:Q2 compared to 27.6% in 2016:Q2).
 The (sa) unemployment rate in June 2017 declined further to 21.2% (compared to 23.5% in June
2016), 2.2 percentage points lower than in December 2016.
 Ministry of Labour (ERGANI) data on dependent employment flows in the private sector for
August 2017 show a decline in the creation of new jobs since the tourist period is coming to its end.
Net flows in August were negative by 14,402 (though better compared to -16,128 jobs in August 2016)
mainly due to dismissals in tourist-related sectors. The share of part-time and intermittent jobs
amounted to 54.5% of new hirings. During the first eight months of 2017, net flows were positive by
248,743 jobs, higher than the corresponding period of 2016 (237,817 new jobs). The share of part-
time and intermittent jobs amounted to 52.4% of new hirings.
 Compensation of employees increased by 2.6% y-o-y in 2017:Q2 compared to 5.5% in 2016:Q2
(nsa figures). As the number of employees increased by 2.1% (ESA 2010), compensation per
employee decreased by 0.5% (3.1% in 2016:Q2).
 The ELSTAT Index of Wages for the total economy (excluding agriculture and private households,
nsa, non working-day-adjusted) increased by 0.6% y-o-y in 2017:Q2 (cf. 4.1% y-o-y in 2016:Q2).
 According to Ministry of Finance cash figures (4 September 2017), outlays for the remuneration of
employees (incl. social security contributions) in the general government rose by 2.9% y-o-y in
January-July 2017. Outlays for central government pensions are no longer a part of the ordinary
budget, but are paid by EFKA (the unified social security fund); therefore, they should no longer be
considered as part of compensation of employees in general government.
 According to information available in ERGANI, 194 new firm-level agreements were signed in
January-August 2017 (covering 73,560 employees), most of which refer to no wage changes or wage
decreases.
8
4. PRICES

 HICP inflation came in at 0.0% in 2016 (as against -1.1% in 2015), largely a consequence of the
various increases in indirect taxation. In the first eight months of 2017 average HICP inflation stood at
1.3%.
 The GDP deflator increased by 0.1% in 2016 and 0.7% in 2017:Q1 in line with the increase in unit
labour costs, as a result of the fall in labour productivity. In 2017:Q2 GDP deflator declined (-0.6%)
reflecting a fall in profit margins.
 Looking forward, the latest special consumption tax increases as of January 2017 in automobile fuel,
tobacco, coffee and telecommunications, on top of previous tax hikes (heating oil in October 2016)
and in combination with higher crude oil prices have reinforced inflationary pressures and have led
overall inflation into positive territory where it is anticipated to remain in 2017. Headline inflation is
foreseen to retreat in 2018 as a result of base effects and stagnant oil prices.
 Real estate market prices continued to decline in 2016, although at a more moderate pace.
Residential property prices are estimated to have declined by 2.4% on average in 2016 (revised data)
and a cumulative 41.9% since their peak in 2008:Q3 (Chart 24). Nominal prime office prices are
estimated to have increased marginally by 0.6% on average in 2016, against a marginal drop of 0.1%
in 2015. Nominal prime retail prices, which declined on average by 3.5% in 2015, recorded a further
marginal decrease of 0.4% in 2016. In 2016:H2 nominal office rents decreased by 0.6% compared to
2016:H1, while nominal retail rents recorded an increase of 0.3% (provisional data) (Charts 25 and
26). The continuing decline in prices in most sectors reflects weak demand, the large stock of
secondary and lower class properties and banks’ reluctance to provide new loans. Nevertheless, the
trend towards stabilisation in various real estate sectors, that emerged during 2016, is expected to
persist throughout 2017.
 HICP headline inflation came in at 0.6% y-o-y in August 2017 from 0.9% y-o-y in July. This outcome
was mainly due to the significant decline in services prices (0.6% from 1.5%) and to a lesser degree in
non-energy industrial goods (-2.6% from -2.3%). The decline in services inflation is primarily attributed
to airplane tickets (-0.9% y-o-y in August from 13.7% y-o-y in July).
 Core inflation (HICP excluding energy and unprocessed food) also declined to 0.4% y-o-y in
August 2017 from 0.9% y-o-y in July, an outcome also attributed to the same two components
(services and non-energy industrial goods) that pushed headline inflation downwards.
 Industrial producer prices (PPI) inflation accelerated to 2.4% y-o-y in July 2017 from 1.2% y-o-y in
June. This development is primarily due to the energy component (5.2% y-o-y in July from 2.6% y-o-y
in June) and, to a lesser extent, to intermediate goods (1.3% from 0.5%) and to durable consumer
goods (1.2% from 1.1%). In the non-domestic market the annual rate of change of prices also picked
up to 5.1% y-o-y in July from 2.1% y-o-y in June.
 Imports price inflation (based on the Import Price Index in Industry) accelerated to 4.2% y-o-y in July
2017 from 1.9% y-o-y in June. [Note: The Import Price Index measures price changes in items
imported by the industrial sector, including capital and investment goods used in the production
process as well as final consumer goods].
 Real estate market: Based on BoG residential property data, nominal apartment prices are estimated
to have declined on average by 1.2% y-o-y in the second quarter of 2017 (provisional data).
Investment in construction for residential property (at constant prices) declined from 9.9% of GDP in
2007 to 0.6% in 2017:Q1.
 As a result of financial constraints, rising uncertainty and a deterioration in the economic climate,
activity in the real estate market remains frozen.
5. EXTERNAL BALANCES, COMPETITIVENESS

 In 2016, the current account moved to a deficit of €1.1 bn, from a surplus of €206 mn in 2015, mainly
as a result of the decline of net sea transport and tourism receipts. A compensating effect came from
the decline in the balance of goods deficit, which was the result of the continuing improvement in the
oil bill and the drop in net payments for purchases of ships. The volume of oil exports rose, while non-
oil exports of goods also grew by 3.7%. Both the primary and secondary income accounts
deteriorated.
 In 2017:H1, the current account showed no substantial change y-o-y and recorded a deficit of €2.8
9
bn. The higher balance of goods deficit was mainly driven by a rise in the oil bill. It was partly offset by
the increased service surplus, reflecting improvements in net receipts from travel, transport and other
services. The primary and secondary income accounts also had a positive contribution.
 Between December 2009 and the end of 2017:H1, Greek exports of goods increased by 51% in
real terms (EA 47%, Chart 30d), while receipts from services declined by 7%. Excluding shipping,
receipts from services showed an increase of 34% in real terms. Overall, Greek exports of goods
and services, excluding shipping, increased by 44% in real terms (EA 46%, Chart 30e). Over the
same period, total imports of goods and services declined by 17% in real terms (EA 36%), 34% since
their historical peak in 2008.
 Looking forward, the international environment is becoming more supportive of Greek exports of
goods and services, as a result of the moderate recovery in global economic activity and world trade.
A pick-up in domestic investment activity would have a positive effect on exports, and, in combination
with increased consumption, a positive effect on imports. Developments seem to be favourable for the
tourist sector as well as shipping, though revenues brought to Greece are still low compared to their
level before the imposition of capital controls. Overall, the current account balance is expected to be
almost balanced in 2017.
 EU funds: Total net current and capital transfers were €3.0 bn in 2016 down from €4.5 bn in 2015 and
€5.2 bn in 2014. Receipts from structural funds have been declining over the last few years. In 2016,
they shrank to €2.0 bn (from 3.0 bn in 2015 and 3.9 bn in 2014), as absorption of the “new ESPA”
2014-2020 has been slower than expected. So far, Greece has absorbed only a fifth of the “new
ESPA” funds, although it is not atypical to see a slow start followed by strong acceleration in
absorption towards the end of the programming period. Out of total structural funds receipts, “new
ESPA” receipts were €1.5 bn in 2016, €800 mn in 2015 and €94 mn in 2014. Receipts for farmers’
subsidies remain more or less stable. In 2016 they amounted to €2.4 bn.
 FDI inflows reached almost €2.8 bn in 2016 (1.6% of GDP), of which 40% reflect mergers and
acquisitions and 26% new equity. It is the biggest FDI inflow recorded since 2010 and was mainly
directed to services sectors (i.e. hotels and restaurants, transportation, financial intermediation and
real estate activities). In 2017:H1 the total inflow was €2.1 bn, of which 37% reflects intercompany
loans whilst 28% is new equity and 20% mergers and acquisitions.
 Migration: According to the European Commission’s latest report (July 2017), total disbursements of
migration-related funds to Greece (authorities and international organisations/agencies operating in
Greece) have reached €395 mn from an allocated total of €871 (45%). This includes long-term funding
and emergency assistance. In addition, €401 mn have been contracted to date under the EU’s
Emergency Support Instrument for humanitarian aid, channeled via international organisations.
 Labour cost competitiveness, despite a deterioration in 2016, has improved significantly from 2009
to 2016 (by 24.1% according to ECB) due to substantial labour market reforms and sizable declines in
wage costs. As a result, the cumulative loss in labour cost competitiveness between 2000 and 2009
has been recovered. According to BoG estimates, an improvement of 0.7% is projected for 2017,
compared to a deterioration of 1.6% for 2016.
 Price competitiveness deteriorated by 0.9% in 2016, but improved by 11.3% cumulatively from 2009
to 2016 according to the ECB. For 2017 BoG expects price competitiveness to improve by 0.5%.
 Non-price or structural competitiveness improvement has stalled or even retreated over the last
two years according to a number of indicators. In particular, the World Bank Doing Business 2017
report (Oct. 2016) ranked Greece 61th among 190 countries (a fall of three places), while according to
the World Economic Forum’s Global Competitiveness Report 2016-2017 (Sept. 2016) Greece ranked
th
86 among 138 nations, a fall of 5 places. Policy instability and high tax rates are now added to the
lack of finance and inefficient government beaurocracy as the main obstacles for doing business in
Greece according to these reports.
 However, it should be noted that Greece has achieved high rates of responsiveness to OECD
recommendations consistently since 2011 (OECD, Going for Growth 2013 & Going for Growth
2015).
 In June 2017, the current account showed a surplus of €842 mn down by €68 mn y-o-y, as a result
mainly of the primary and secondary income accounts turning to deficits from surpluses. The deficit on
the balance of goods also increased. These developments were only partly offset by the rise in the
services surplus.
 The y-o-y increase of €27 mn in the deficit of the balance of goods was mostly attributable to an
increase in the deficit of the non-oil balance of goods. It should be noted that non-oil exports of goods
rose by 11.0% and oil exports by 9.6% at constant prices.
 The €221 mn y-o-y rise in the surplus of the services balance is for the most part due to a 37.8%
10
rise in net – mainly sea – transport receipts, as well as to higher net travel and other services receipts.
Specifically, non-residents' arrivals and the corresponding receipts showed an increase of 13% and
14.2%, respectively.
 In 2017:H1, a y-o-y widening in the deficit of the balance of goods is primarily the result of an
increase in the deficit of the oil balance. The deficit of the non-oil balance of goods also grew, as the
€1.1 bn increase in the value of imports more than offset the €890 mn rise in the value of exports.
Overall, exports of goods grew by 5.8% and imports by 7.4% at constant prices. The sectors with the
largest contribution to the exports increase, during the first six months of 2017, besides the fuel sector,
were ‘’metals and metallic products’’, ‘’chemicals’’ (including pharmaceuticals), ‘’textiles and apparel’’
and ‘’food and beverages’’. As regards the increase of imports, in the same period, this can be
attributed mainly to imports of oil and ships.
 The €754 mn increase in the surplus of the services balance is the result of an improvement in all of
its main components and mostly in the transport balance. Compared with the 2016:H1, non-residents'
arrivals increased by 6.6% and the corresponding receipts by 7.1% as average expenditure per trip
increased by 0.7%.
 In 2017:H1 receipts from transportation services increased by 17.9%. However, they have not
returned to the levels seen before the imposition of capital controls, which, together with tax
uncertainty, continue to influence the shipping industry and the extent to which it directs business
through other countries. Freight rates based on the ClarkSea Index increased by 3.0% y-o-y; dry bulk
freight rates increased, whereas tanker freight rates continued to fall.
 In 2017:H1, the surpluses of the primary and secondary income accounts improved y-o-y, but the
capital account surplus declined almost by half, as general government receipts from the EU
decreased significantly.
 EU funds: In January-August 2017 €2.0 bn were received in farmers’ subsidies and €484 mn from
structural funds; the inflows were largely in January-February and June-July periods.
 FDI inflows in June 2017 reached €537 mn -almost double that of May- of which 61% reflects
mergers and acquisitions. The main transaction (€328 mn) concerns the sale of 24% of Independent
Power Transmission Operator (IPTO or ADMIE) S.A. to STATE GRID EUROPE LTD (UK).
 Based on ECB data, unit labour cost competitiveness improved by 1.5% y-o-y in 2017:Q1 and
price competitiveness improved by 0.3% y-o-y in 2017:Q2, despite the appreciation of the nominal
effective exchange rate (0.3% y-o-y in 2017:Q2).
6. FISCAL DEVELOPMENTS

 General government primary outcome – programme definition
The general government primary outcome in 2016 is estimated at 4.2% of GDP, outperforming the
programme target for a primary surplus of 0.5% of GDP by a large margin (Chart 34). According to the
latest MoU, the new fiscal path foresees primary balance targets of: 1.75% of GDP for 2017 and 3.5%
of GDP for 2018 to 2022.
 Medium Term Fiscal Strategy (MTFS) 2018-2021: The programme primary surplus target of 3.5% of
GDP is projected to be achieved during 2018-2021, with a margin of 0.5% of GDP beyond 2018. The
primary balance (programme definition) is projected at 1.9% of GDP in 2017, 3.5% of GDP in 2018
and 4.0% of GDP in 2019-2021, respectively. The projection is underpinned by expenditure reducing
measures of 1.3% of GDP in 2019 and revenue increasing measures of approximately 1% of GDP in
2020. Conditional on attaining the fiscal targets, the fiscal mix will be rebalanced through increases
mainly in targeted transfers and public investment amounting to 1.4% of GDP in 2019 and through tax
reductions of 1.7% of GDP in 2020 and 1.0% of GDP in 2021. The debt to GDP ratio is projected to
decline over the whole projection horizon on the back of primary surpluses, recovering economic
activity and privatization revenue amounting to 2.5% of GDP, of which 1.2% of GDP is expected in
2017 and 1.1% of GDP in 2018 (Chart 35).
 Fiscal reforms of the latest programme: All fiscal reforms included in the new programme have
been legislated since August 2015 and include inter alia: the full legal independence of ELSTAT;
pension and income tax reform; indirect taxation; privatizations; an automatic contingent fiscal
correction mechanism; the enhancement of electronic payments; as well as the release of the MTFS
2018-2021.
 Programme reviews: Following the positive assessment of the programme implementation in May
2016, the first review of the new programme was completed in October 2016. The second review was
completed in June 2017.
 Financing: The first tranche of the new programme amounted €16 bn and was gradually disbursed by
the ESM in 2015 (€13 bn in August, €2 bn in November and €1 bn in December). Another €5.4 bn
11
were disbursed in December 2015 for bank recapitalization costs. The second tranche of €10.3 bn
was gradually disbursed in 2016 (€7.5 bn in June, €2.8 bn in October), of which €3.5 bn was for
arrears clearance. The third tranche of €8.5 bn (€1.6 bn of which is for arrears clearance) was
approved in July 2017 and is gradually being disbursed starting with €7.7 bn (€0.8 bn of which is for
arrears clearance). Additionally, Greece returned to global capital markets in July after three years
raising €3 bn (yield: 4.625%; annual coupon rate: 4.375%). Of the €3 bn, around half represented a
swap in exchange for bonds due to mature in 2019.
 Debt relief measures: The Eurogroup of 24 May 2016 recalled the medium-term primary surplus
target of 3.5% of GDP as of 2018 and agreed to assess debt sustainability with reference to the
benchmark of 15% of GDP for Greece’s gross financing needs during the post programme period for
the medium term, and 20% of GDP thereafter. The Eurogroup also agreed a first set of measures:
 For the short term, including the smoothing of the EFSF repayment profile under the current
weighted average maturity, the use of the EFSF/ESM diversified funding strategy to reduce
interest rate risk without incurring any additional costs for former programme countries and a
nd
waiver of the step-up interest rate margin related to the debt buy-back tranche of the 2
programme for 2017.
 For the medium term, it expects to implement a possible second set of measures including
nd
abolishment of the step-up interest rate margin related to the debt buy-back tranche of the 2
programme as of 2018, the restoration of ANFA and SMP profits to Greece from 2017 onwards,
liability management utilizing unused resources within the ESM programme and targeted EFSF
reprofiling.
 Finally, for the long term, it agreed to a contingency mechanism should gross financing needs
exceed the benchmark which could entail measures such as further EFSF reprofiling and deferral
of interest payments.
th
In this context, the Eurogroup of 5 December 2016 endorsed the full set of short-term measures on
the basis of proposals by the ESM and preparatory work by the EWG, which were adopted by the
ESM on 23.1.2017 and will consist of:
 The smoothening of the EFSF repayment profile within the current weighted average maturity of
up to 32.5 years;
 The waiver of the step-up interest rate margin amounting to 200 bps related to the debt buy-back
tranche of the 2nd Greek programme for 2017;
 The use of the EFSF/ESM funding strategy as markets allow to reduce interest rate risk without
incurring any additional costs for former programme countries. This measure will be implemented
through: (i) exchanging the EFSF/ESM floating-rate notes held by Greek banks with fixed-rate
notes, (ii) the ESM entering into interest rate swaps to mitigate the risk of higher market rates and
(iii) introducing matched funding for future disbursements to Greece under the current
programme.
Finally, the Eurogroup of 15 June 2017 reconfirmed the commitments and principles contained in the
statements of May 2016. In addition, specific mention was made to a possible deferral of EFSF
interest and amortization of up to 15 years in the context of the medium-term measures. A growth-
adjustment mechanism is envisaged to correct for differences between assumed and actual growth
rates after 2018. The primary surplus target of 3.5% of GDP will be reduced to a primary surplus equal
to or above but close to 2% of GDP during 2023-2060.
 On 12 July 2017 the European Commission recommended closing the Excessive Deficit Procedure
(EDP) for Greece on account of the significant progress made in returning to a path of fiscal
sustainability. According to the Commission Spring 2017 Economic Forecast, the positive fiscal
performance of Greece is durable and hence the necessary conditions to recommend closure have
been fully met.
 General government figures – ESA 2010 (Chart 36)
According to the Spring 2017 EDP notification (21.04.2017), in 2016 the general government budget
recorded a surplus of 0.7% of GDP compared to a deficit of 5.9% of GDP in 2015, and a primary
surplus of 3.9% of GDP compared to a primary deficit of 2.3% of GDP in 2015. The improvement
stems from both higher revenue (+3.1%) and lower expenditure (-9.5%). The revenue increase stems
from higher current revenue (+5.9%) in all categories, compensating for a significant drop in capital
revenue (-38.8%), the latter partly due to a base effect from the recording of motorway concessions in
2015. The increase in current revenue reflects, inter alia, the tax and social security reform, a higher
BoG dividend, a change in the recording of ANFA revenue, as well as beneficial effects from the
intensified use of electronic payments. The decline in expenditure is primarily driven by lower capital
expenditure (-54.8%), mainly reflecting the unwinding of banking support costs and, to a lesser extent,
decreased public investment on the back of lower deliveries of military hardware. Current primary
spending remained broadly stable. The general government debt increased in 2016 to 179% of GDP
12
compared to 177.4% of GDP in 2015.
2017:Q1 data show a general government deficit of 0.5% of GDP compared to a deficit of 1.1% of
GDP in 2016:Q1 and a primary surplus of 0.3% of GDP compared to a primary deficit of 0.3% of GDP
in 2016:Q1. Total revenues increased slightly (+0.3%) due to the increase in social contributions
(+4.7%) as well as capital revenue. Primary expenditures decreased (-4.9%) in most categories
(especially in social payments). At the end of this period, general government debt stood at 171.4% of
GDP against 179% of GDP at end-March 2016. The improvement reflects both debt repayment
through intergovernmental borrowing as well as a denominator effect.
 General Government cash balance (MoF): In January-July 2017 the consolidated general
government balance recorded a surplus of 0.1% of GDP, compared to 0.0% of GDP during the same
period last year and the primary balance remained stable at a surplus of 2.3% of GDP. This outcome
reflects lower tax revenues (-2.3%), partly due to a negative base effect from the ENFIA instalment
schedule, and lower EU transfers (-36.6%) compensated by increased social security contributions
(+4.7%), higher privatization revenue and lower primary expenditure (-1.7%), mainly on pensions
(-4.4%).
 Arrears accumulation: After a decrease of almost €1.2 bn in 2016, the stock of arrears increased in
January-July 2017 by €682 mn and reached around €5.4 bn. Nearly one third of total arrears
(excluding tax refunds) originate in the public healthcare system (EOPYY) (Chart 37).
 Arrears payments (special account): In July-December 2016 almost €3.1 bn was paid out for
arrears clearance (of which €2.7 bn to suppliers and €0.4 bn for tax refunds). In January-June 2017
approximately €600 mn was paid out.
 MoF Central Government Debt at end-July 2017 amounted to €326.4 bn (or 180.1% of GDP)
compared to €326.4 bn (or 185.6% of GDP) at end-Dec. 2016.
 State budget execution (MoF): According to preliminary data for January-August 2017, the State
budget recorded a deficit of 0.7% of GDP, compared to a deficit of 1.5% of GDP in January-August
2016.
 The primary balance recorded a surplus of 2.0% of GDP (Chart 38a, 38b) compared to a surplus
of 1.2% of GDP during the same period last year. The improvement reflects a decrease in
ordinary primary expenditure (-5.2%) and in public investment expenditure (-27.1%).
 The primary balance was in line with the revised period target, due to the containment of ordinary
primary expenditure (by €1.2 bn) as well as public investment expenditure (by €0.5 bn) that
compensated for ordinary revenue shortfall (by €0.9 bn), lower privatization revenue (by €0.3bn)
as well as higher tax refunds (by 0.5 bn). The large deviation of ordinary revenue from the period
target largely reflects the one month delay in the payment of the first instalment of the property
tax (€1 bn).
7. MONEY, CREDIT AND FINANCIAL MARKETS

 The strong deposit outflows ceased after the imposition in mid-2015 of restrictions on deposit
withdrawals and cross-border transfers of funds and the agreement on the third economic adjustment
programme. The completion of bank recapitalisation in December 2015 as well as the conclusion of
the first review in June 2016 and the gradual relaxation of capital controls represent important steps
towards the restoration of confidence in the Greek banking system which has been facilitating the
recovery of bank deposits. The successful completion of the second review of the programme has
been supportive of the improvement of bank liquidity.
 Since the imposition of capital controls and until June 2017, a total of €9.1 bn of funds previously
invested by Greek residents (firms and households) in financial assets abroad, i.e. bank deposits
(€5.3 bn) and equity securities including mutual fund shares (€3.8 bn), has been repatriated. Overall,
deposits of the domestic non-financial private sector with Greek banks have increased by €5.8 bn (or
4%) between end-June 2015 and July 2017.
 The contraction of bank credit to households resumed its decelerating path in the second half of 2016,
after recording broadly stable y-o-y rates during 2015-mid-2016. The deceleration of the contraction of
bank credit to non-financial corporations that had been present since early 2014, was reversed right
after the imposition of capital controls in June 2015, reflecting the slowdown in economic activity;
however, since December 2015 it has started to decelerate once more.
 Financial resources, partly intermediated through local banks, have been directed to non-financial
firms in accordance with various European initiatives. Specifically, the EIB, the EIF and the Hellenic
Fund for Enterprise and Development (ΕΤΕΑΝ) co-finance or guarantee loans channelled through
commercial banks, mostly to SMEs. The EIB also provides export-guarantees to SMEs (up to €1.5 bn
p.a.). New programmes for the financing of SMEs using structural funds from the EU budget allocated
13
to Greece for the period 2014-2020 have been designed.
 In June 2017, the EIB activated a new €400 mn Trade Finance Facility: the EIB will guarantee
letters of credit, financial guarantees and other trade and export finance instruments issued by
domestic banks aiming to facilitate trade and export transactions of Greek SMEs and mid-caps
with a maximum tenor of three years.
 In April 2017, the European Investment Fund (EIF) signed four new agreements with Alpha
Bank and Piraeus Bank which will support lending to small and medium-sized enterprises (SMEs)
across the country. These agreements will allow the two banks to provide €420 mn of loans to an
estimated 2,000 Greek SMEs on favourable financial terms including reduced collateral
requirements. The loans will be provided as a result of a guarantee from the EIF under the
European Commission's COSME programme and the European Commission's initiative
'InnovFin’ with financial backing from the European Commission. Similar agreements have
already been signed with National Bank and Eurobank.
 Moreover, two financing tools which have been successful in the past are about to be activated :
i) ETEANs new “Enterpreneurship Fund II” will finance SMEs and provide guarantees with an
initial budget of €400 mn from EU structural funds (excluding co-financing by Greek banks) and ii)
the new Household Energy Saving programme (II), aiming to boost also SMEs in the construction
sector which starts with a budget of €248 mn from structural funds.
 The new Fund of Funds, “EquiFund” was created as the relevant agreement between the Ministry
and the EIF was signed (December 22, 2016). The Fund will be managed by the EIF, contributing
equity finance to SMEs. Financial contributions to the new fund will come from the State, the EIF
and other international institutions, investment banks and private funds. The Greek State will
invest €200 mn (from national resources and structural funds) and the EIF will contribute another
€60 mn while further funds from the EIB are also expected, mobilizing resources via the Junker
plan.
 Deposit rates have been declining since mid-2012; after June 2015 this trend has been assisted by
the imposition of restrictions on deposit withdrawals.
 Average bank lending rates to corporations and households stand close to historical lows. Lending
rates on corporate loans have been on a declining path since 2012 with some interruption after the
imposition of the various restrictions on banks in mid-2015. Following a sharp decline between mid-
2011 and mid-2013, mortgage rates have remained relatively stable since then. By contrast, the
average rate on consumer credit has been on a moderately upward trajectory since mid-2013.
 Greek government bond yields were relatively stable during 2017:Q1 and fell during 2017:Q2 (to
stand at 30/6/2017 233 bps lower than at the end of 2016), as the completion of the second review
has been associated with improving market sentiment; the improvement in market sentiment, made
possible the issuance of a new 5-year GGB, with an outstanding amount of €3 bn; half of this amount
resulted from exchanging old notes and half represents new money.
 Bonds issued by Greek non-financial corporations benefited from the improving market sentiment
and have decoupled from Greek government bonds, as their yields have followed an almost
uninterrupted downward trend since the beginning of the year, thus now standing at historically low
levels.
 Private sector deposits: In July 2017, bank deposits of the non-financial private sector rose by €0.3
bn, due to an increase in the deposits of households (+€0.4 bn), while non-financial corporate
deposits were broadly stable (-€0.09 bn) (Chart 39). From end-May 2016, when the first review of the
programme was concluded, to July 2017, bank deposits of non-financial corporations and households
have increased by almost €5.9 bn (or 4%).
 In July 2017, the annual rate of change of bank credit to non-financial corporations turned more
negative and stood at -0.5%; it has been fluctuating around zero for the past 12 months (June 2017:
-0.2%). Nevertheless, the annual contraction of bank credit to households became less intense
(-2.4%) (June 2017: -2.5%) (Charts 41, 42 and 43).
 The Bank of Greece’s small-scale Financial Conditions Index (FCI) which tracks whether financial
conditions are looser or tighter than their long-run average (depicted by 0) has been broadly stable
since 2012, fluctuating around a level that is very low by historic standards due inter alia to the tight
funding conditions for banks. The deterioration associated with the uncertainty in the last quarter of
2014 and the first half of 2015 culminating in the imposition of capital controls gradually began to
reverse from August 2015 onwards. Recent volatility reflects uncertainty prior to the conclusion of the
second review, as well as the negative loan flows recorded in recent months. However, the overall
trend remains positive (Chart 44).
 On July 7th, the EIB and Alpha Bank signed a second -€150 mn- loan agreement under the EIB’s
“Loan for SMEs and Mid-Caps” low-cost credit line to Greek banks. Alpha Bank will onlend this
14
amount at a favourable interest rate selecting from among the eligible enterprises. This second loan
agreement follows the completion of the allocation to final recipients of the €100 mn loan, signed
between the EIB and Alpha Bank in December 2016.
 In 2016, bank lending rates to non-financial corporations decreased on average compared to the
previous year, while the respective rates for households moved somewhat higher. In July 2017,
interest rates increased mainly for corporate credit (up by 43 bps to 4.49%) and to a lesser extent for
loans to households (mortgage rate down by 13 bp to 2.66%, rate on consumer credit up by 34 bps to
9.85%) (Chart 45).
 During 2016 and early-2017, deposit rates continued to decline. In July 2017, the time deposit rate
offered to households increased slightly to 0.63% (Chart 46).
 Bank Lending Survey results for Greece (2017:Q2 compared to 2017:Q1):
 Credit standards tightened with respect to loans to households but remained unchanged vis-à-vis
non-financial corporations.
 Banks have narrowed lending margins on credit to large corporations for the 3rd quarter in a row
mainly in response to intensified banking competition and, according to the ad hoc questions, to
new prudential regulations. With the exception of the banks margins on relatively riskier mortgage
loans which have also shrunk, no other term or condition on any form of credit was varied.
 The only change in credit demand recorded by the survey was an increase in the demand for loans
by large enterprises. At the same time, respondents acknowledged as influences curtailing their
demand for bank credit developments in corporate fixed investment expenditures as well as
mergers and acquisitions activity and the financing of corporate expenditures from owners
resources or via the issuance of securities.
 Banks report an improvement in their ability to collect retail deposits (expected to continue during
2017:Q3 too) as well in their access to the interbank and short-term debt markets, while access to
remaining funding markets remained unchanged.
 Three out of the four systemic banks participated in the final TLTRO in March 2017. Banks indicate
that they use funds drawn through TLTROs primarily to reduce their recourse to alternative sources
of central bank funding and secondarily to extend corporate loans or even to finance the acquisition
of marketable financial instruments.
 SAFE results: Oct. 2016-Mar. 2017 compared to Apr.-Sep. 2016
 External financing conditions for Greek SMEs remained unfavourable overall, though considerably
less than in the previous round.
 Access to finance remained the most pressing problem for Greek SMEs (27% from 24%) at a time
when their financing needs continued to increase (Chart 50). However, the deterioration reported in
the availability of bank finance (loans and credit lines) was less pronounced than in the previous
round (net percentage: -20% from -29%) (Chart 51).
 The loan rejection rate decreased to 18% (from 20% in the previous round) and the loan approval
rate (percentage of applications satisfied mostly or in full) increased to 41% (from 35%).
 The moderation in the contraction of the supply of credit is attributed to less negative influence from
firm-specific prospects and from the access to public financial support (including guarantees);
however, the adverse influence from the general economic outlook remained sizeable.
 The net percentage of SMEs reporting increases in bank lending rates remained rather low relative
to all previous rounds of the survey. The net percentage of firms reporting increases in collateral
requirements and in other costs of bank financing rose, while that reporting reductions in the
maturity and size of bank loans decreased.
 Greek government bonds: Yields on GGBs fell somewhat during the first two weeks of September.
The yield of the ten-year Greek sovereign bond fell by 14 bps compared to two weeks ago (29/8) to
stand at 5.30% (on 12/9/2017), while the yield of the recently issued 5-year GGB was down by 20 bps
at 4.38% compared to two weeks ago. More substantial was the fall in the yields on shorter term
notes, with the 2-year GGB yield falling by around 30 bps (compared to 29/8) to 2.88%; thus, the yield
curve became steeper, as the spread between the 10-year and the 2-year note increased by 14 bps to
242 bps, compared to its value on 29/8. As the yield on the German Bund rose by around 14 bps over
the same period, the spread of the ten-year Greek sovereign bond vis-à-vis the Bund returned to
levels below 500 bps (on 12/9/2017, GR10y-DE 10y spread: 489 bps; see Chart 53b).
 Corporate bonds: Greek Corporate Bond (GCBs) yields marginally fell in the previous two weeks,
indicating improvement in the country risk premium. The yield on BoG’s GR NFC bond index, which
measures the weighted average yield on international bonds issued by large industrial companies
residing in Greece, fell somewhat to 3.0% (on 12/9/2017), i.e. 7 bps lower than its value at 29/8, which
constitutes a new historical low level for GCB yields. By contrast, yields on bonds issued by euro-area
non-financial corporates with ratings in the low investment-grade category rose somewhat, thus
resulting in a sharper fall in the spread of the GR NFCs bond index vis-à-vis the iBoxx EA NFCs BBB,
15
which at 182 bps on 12/9 was 12 bps lower compared to 29/8 (see Chart 52).
 Greek equities: prices on the Athens Exchange fell, with the bank sector index marking a sharp drop.
The general index of the Athens Exchange on 12/9/2017 stood 1.4% lower than its value on 29/8,
while the sharp equity price fall varied considerably across banks (banking sector index: -6.2%; Alpha
bank: -3.8%, Attica bank: -33.3%, Eurobank: -6.7%, NBG: -5.7%, Piraeus bank: -11.6%); prices of
industrial companies’ shares also fell although by less (on 12/9 the industrial sector index was down
2.9% compared to its value on 29/8). Volatility of daily returns remained subdued (2-week average
volatility of daily returns: 0.7%), being markedly lower compared to both the average figure for 2016
(1.6%) and the ten-year average (2%). The intraday range of prices remained tight (1%), in line with a
low volume of transactions (2-week average daily transactions on 12/9/2017: €44 mn; average daily
transactions in 2016: €57 mn).
8. BANKING SECTOR

 The four Greek significant banks have announced semi-annual financial results for the fiscal year
2017. The overall picture is deemed positive. Based on consolidated figures, pre-provisioning income
amounted to €2.1 bn, recording a 6.6% increase on a y-o-y basis, while pre-tax income was €208.9
mn compared to €28.6 mn profits in 2016:H1.
 The key factors making a positive contribution to the results were the reduction in interest expenses
(due to declines in the cost of deposits and decreased reliance on ELA financing as well as lower cost
of State guarantees, due to reduced usage of pillar II bonds of L. 3723/2008), the increase in income
from fees and commissions, some one-off income items from the sale of businesses and the reduction
of loan loss provisions. Also, further improvement in managing operating costs weighed positively on
the results. On a y-o-y basis, operating income rose by 0.5%, while operating expenses recorded a
reduction of 5.1%.
 The fully loaded CET1 ratio was preserved, around 16.2%, comfortably above the EU average (13.6%
as of December 2016 according to EBA).
 Regarding asset quality, the stock of non-performing exposures at end-June 2017 decreased by 3.2%
compared to end-December 2016. The full implementation of the actions agreed between the
European Commission acting on behalf of the European Stability Mechanism, the Hellenic Republic
and the Bank of Greece in facilitating the management of troubled assets is crucial in order to tackle
the problem efficiently.
 Cross-border payments from Greece are taking place following ministerial decisions authorizing
specific categories of transactions and in most cases requiring approval by the Banking Transactions
Approvals Committee. A number of ministerial decisions have gradually relaxed the restrictions in
place.
 According to the latest report on operational targets for non-performing exposures published by the
BoG on 6 September 2017, Greek banks in total managed to meet the targets for the reduction in the
stock of NPEs in 2017:H1. End-June 2017 data indicate that the stock of NPEs declined to €102.9 bn
(€3.4 bn lower compared to the end of 2016). The developments in 2017:H1 were mainly attributed to
extensive write-offs (€3.3 bn), as the default rate still exceeds the cure rate. The NPE ratio stands at
44.9%; if however the off-balance sheet items and a current loan to the Greek State not included in
target-setting are excluded from the denominator, it stands at 50.6%, i.e. higher than the foreseen
level of 50%. Also, banks marginally missed the target for the stock of NPLs which stands at €72.8 bn
or approximately €0.4 bn higher than the targeted amount, while the NPL ratio came in at 36.1%
compared to the foreseen level of 35.0%.
 Four more licenses were granted to credit servicing firms for the management of credit claims
(B2KAPITAL, Independent Portfolio Management, UCI Hellas, Resolute Asset MANAGEMENT); thus
the total number of firms having acquired a licence so far increased to eight.
16
CHART BOOK
1. OUTPUT, DEMAND AND CONJUNCTURAL INDICATORS

Table 1: GDP and main components, seasonally adjusted
Percentage changes (chain linked volumes, reference year 2010)
2014 2015 2016 2017
2014 Q1 Q2 Q3 Q4 2015 Q1 Q2 Q3 Q4 2016 Q1 Q2 Q3 Q4 Q1 Q2
Private consumption 0.6 0.9 0.3 0.2 1.1 -0.3 1.3 1.9 -4.1 -0.4 1.4 -0.7 -0.6 6.1 1.0 1.2 0.7
Public consumption -1.2 1.3 3.4 -3.1 -6.2 0.0 0.0 -3.1 0.8 2.5 -2.1 -3.5 -1.5 -1.3 -2.0 -1.9 3.3
Gross fixed capital formation -4.4 -6.4 -3.6 -7.4 -0.3 -0.2 4.0 -14.0 -5.2 13.9 0.0 -10.4 18.1 12.7 -14.0 10.8 -4.6
Dwellings -53.1 -51.7 -59.9 -45.7 -54.1 -26.0 -33.4 -11.7 -36.2 -18.8 -12.6 -17.0 -23.4 -3.3 -2.9 -11.0 -5.1
Other construction -3.9 14.2 -1.6 -5.0 -21.5 5.0 -12.6 -4.8 -0.1 46.4 4.6 14.2 13.5 12.8 -16.7 -9.4 -9.3
Equipment 21.6 0.2 38.4 -2.7 53.1 -2.6 51.7 -19.2 -13.0 -15.6 -1.6 -23.0 37.5 15.0 -19.0 58.3 -2.2
Domestic demand -0.4 0.1 0.5 -1.4 -0.7 -0.2 1.3 -1.0 -3.2 1.9 0.5 -2.4 1.0 5.2 -1.6 1.6 0.7
Exports of goods and services 7.7 5.6 4.4 9.4 11.3 3.1 12.6 11.2 -7.7 -2.7 -1.7 -10.2 -10.3 10.8 5.0 5.2 9.5
Exports of goods 4.1 3.1 -1.1 2.5 12.5 8.6 9.9 8.0 6.5 10.1 3.0 2.0 3.8 8.3 -2.1 4.9 8.8
Exports of services 12.2 9.5 11.5 17.3 10.1 -2.7 15.4 15.0 -22.3 -15.4 -7.4 -21.8 -24.4 14.0 11.6 7.8 11.5
Imports of goods and services 7.6 0.0 9.0 5.4 16.6 0.3 15.1 4.0 -14.1 -2.7 0.6 -10.2 -2.1 13.9 3.5 11.7 3.1
Imports of goods 8.1 -0.3 9.3 5.7 18.5 3.4 14.8 4.1 -7.7 3.5 3.4 -3.8 5.7 10.5 2.2 12.4 0.7
Imports of services 5.6 1.3 7.8 3.9 9.6 -11.7 16.8 3.7 -39.2 -26.6 -11.5 -32.0 -30.4 33.7 8.6 11.4 15.7
Real GDP at market prices 0.4 0.6 0.0 0.8 0.2 -0.3 0.1 0.4 -2.4 0.7 0.0 -0.7 -0.5 2.0 -1.0 0.4 0.8
Source: ELSTAT.
Table 2: Value added decomposition, seasonally adjusted
Percentage changes (chain linked volumes, reference year 2010)
2014 2015 2016 2017
2014 Q1 Q2 Q3 Q4 2015 Q1 Q2 Q3 Q4 2016 Q1 Q2 Q3 Q4 Q1 Q2
Agricultural sector 3.5 -0.1 4.5 6.1 3.5 -2.2 0.8 -2.9 -4.4 -2.3 -1.3 -3.8 0.2 -0.5 -1.1 1.2 -1.2
Industry and construction -6.5 -2.2 -7.8 -7.2 -8.8 -0.2 -6.1 -5.1 1.6 9.7 1.6 1.2 3.7 3.4 -1.7 2.4 2.7
Industry -6.0 -3.7 -6.3 -7.3 -6.6 0.3 -2.0 -2.9 2.4 3.9 1.6 0.0 3.8 0.8 2.0 7.9 5.7
Construction -8.3 3.8 -13.3 -6.4 -17.1 -2.0 -20.8 -14.0 -1.7 35.5 1.3 6.3 3.4 14.5 -14.3 -21.1 -11.2
Services 1.4 1.6 1.3 1.2 1.2 -0.3 0.7 0.6 -1.8 -0.7 -0.3 -1.0 -0.8 0.9 -0.3 0.0 -0.2
Trade, hotels and restaurants, transport 4.7 5.0 4.2 4.2 5.5 -0.6 2.0 1.2 -3.4 -2.1 -0.6 -2.7 -1.7 2.3 -0.1 2.1 1.4
Information & communication -10.5 -4.6 -11.9 -14.2 -11.0 -1.2 -6.5 -0.5 0.3 2.4 -0.1 0.5 -0.3 1.6 -2.1 -1.4 -2.1
Financial services -4.6 -3.6 -4.7 -6.3 -3.7 0.9 1.6 2.2 -0.6 0.3 -2.1 -3.3 -3.3 0.5 -2.2 -5.1 -6.1
Real estate related services 3.1 2.2 3.3 3.7 3.3 1.2 2.2 1.4 0.8 0.5 0.2 0.2 0.2 0.2 0.2 0.2 0.2
Professional services -3.3 -9.0 -6.1 1.5 0.9 2.0 5.6 4.0 -3.3 2.0 -3.8 -3.9 -4.4 -1.1 -5.8 -1.0 0.5
Public admin 1.5 2.8 2.9 1.3 -0.9 -1.5 -0.9 -1.3 -2.2 -1.6 0.2 -0.7 0.3 0.2 1.1 -0.6 -1.8
Arts and recreation -3.1 -0.7 -4.6 -3.9 -3.0 -3.5 -5.8 -2.1 -5.0 -0.9 1.4 5.2 0.2 3.2 -2.9 -1.2 5.5
Value added in basic prices 0.0 0.6 -0.2 0.0 -0.3 -0.3 -0.1 -0.2 -1.9 1.0 -0.1 -0.9 0.0 1.6 -0.9 0.8 0.3
Taxes on products 0.9 -1.5 -0.1 3.4 1.8 1.7 2.8 4.1 -1.7 1.7 0.2 0.4 -1.2 3.0 -1.3 0.3 2.6
Subsidies on products -23.7 -17.6 -21.5 -25.1 n 14.4 22.2 16.2 10.8 9.6 1.2 2.4 2.0 1.5 -1.0 1.4 0.3
GDP in market prices 0.4 0.6 0.0 0.8 0.2 -0.3 0.1 0.4 -2.4 0.7 0.0 -0.7 -0.5 2.0 -1.0 0.4 0.8
Source: ELSTAT.
17
Table 3: Macroeconomic projections for Greece
(change over previous period)
2016 2017f 2018f 2019f
GDP (constant prices) 0.0 1.6 2.4 2.7
Private consumption 1.4 1.1 1.4 1.3
Government consumption -2.1 1.4 -0.2 1.8
Gross fixed capital formation 0.1 5.6 10.1 11.6
Exports of goods and services -2.0 5.5 4.7 4.3
Imports of goods and services -0.4 4.4 4.1 3.9
Changes in inventories -0.1 -0.3 0.1 -0.1
HICP 0.0 1.2 1.1 1.2
HICP excluding energy 0.5 0.7 1.1 1.2
Total employment 1.8 1.5 2.0 2.3
Unemployment rate (% of labour force) 23.5 22.4 20.9 19.1
Current account (% of GDP) -0.6 0.4 0.3 0.5
Sources: ELSTAT and BoG.
Table 4: Projections for Greek GDP by international organizations

Release
Percentage changes on a year earlier 2016 2017f 2018f
date
OECD June 2017 0.0 1.1 2.5
European Commission May 2017 0.0 2.1 2.5
April 2017 0.0 2.2 2.7

IMF
Aug. 2017 0.0 1.1 1.9
Consensus
Sources: ΟECD( Economic Outlook, June 2017), European Commission (European Economic Forecast, May 2017),
IMF (World Economic Outlook, April 2017 ), Consensus Economics (Consensus Forecasts, June 2017).
18
Chart 1: Decomposition of Greek real GDP Chart 2: Contributions to annual GDP growth rates in
(percent) each quarter (cumulated percentage points)
Source: ELSTAT, National Accounts, 6 March 2017 Source: ELSTAT, National Accounts, 6 March 2017
(provisional, sa data). (provisional, sa data).
Chart 4: Household disposable income and

Chart 3: Greek real gross value added by economic components (annual percentage change of real and
activity (index: 2009:Q1=100) nominal disposable income and contribution of components)
Source: ELSTAT, non-financial accounts of institutional

sectors and ECB "Household Sector Report", May 2017.
Source: ELSTAT, National Accounts, 6 March 2017
Note: Taxes = Current taxes on income, wealth + Taxes on
(provisional, sa data).
production and imports (including ENFΙΑ).
19
Chart 5: Compensation of employees and components Chart 6: External financing of NFCs by instrument
(annual percentage change of compensation of employees (flows, 4 quarter moving sum, EUR bn)
and components)
Source: ELSTAT, National Accounts. Sources: ECB (SDW), Bank of Greece, Financial Accounts.
Chart 7: Greek and Euro Area Economic Sentiment Chart 8: PMI overall index and new export orders
Indicator (balance) component (3-month moving average)
Source: European Commission. Source: Markit.
20
Chart 9: Industrial confidence, production, Chart 10: Industrial production and industrial
employment and export orders confidence indicator
(balances; 3-month moving averages; sa data) (annual percentage change of 12-month moving average of
industrial production index and balance)
Sources: ELSTAT (for industrial production index)

Source: European Commission (business and consumer
and European Commission (for industrial confidence
surveys).
indicator).
Chart 11a: Retail sales and retail sales confidence Chart 11b : Retail sales and consumer confidence
indicator component indicator component
(annual percentage change and balance) (annual percentage change and balance)
Sources: ELSTAT (for volume of retail sales excl. fuel)

Sources: ELSTAT (for volume of retail sales excl. fuel) and
and European Commission (for consumer confidence
European Commission (for retail confidence indicator).
indicator).
21
Chart 12: Consumer confidence and ASE general Chart 13: Tourist activity indicators
index (balance and level) (annual percentage changes and balance)
Sources: Frontier Survey of the Bank of Greece

Sources: ASE (for ASE index) and European Commission
(for tourist arrivals and travel receipts) and FEIR (for
(for consumer confidence indicator).
prospects of demand in hotels and restaurants).
2. STRUCTURAL REFORM INDICATORS
Chart 14: Number of procedures to start a business Chart 15: Number of days to start a business
Sources: Doing Business 2017, 2014, 2009, World Bank and BoG calculations.
Notes: On the left-hand scale, the higher the value, the more costly it is to start a business as measured by the number of
procedures (Chart 14) / the time needed (Chart 15) to open a business. As a measure of the reforms implemented, the right-hand
scale shows the change in the number of days to open a business for two sub-periods. A change greater (less) than zero means the
country moves closer to (further away from) best practice. No value is available for MT for 2008.
22
Chart 16: OECD Employment Protection Legislation Index
Sources: OECD, EPL index (version 3) and BoG calculations.

Notes: EPL index varies from 0 to 6, where lower values indicate a lower degree of employment protection through legislation. As a
measure of the reforms implemented, the right-hand scale shows the change in the index between 2008-2013. A change greater
(less) than zero means the country moves closer to (further away from) best practice. No values for non-OECD countries in the
euro area. No value is available for LV for 2008.
3. LABOUR MARKET AND COSTS
Chart 17: Monthly unemployment rate Chart 18: Employment changes

(in % of the labour force) (annual percentage change)
Source: ELSTAT, Labour Force Survey. Source: ELSTAT, Labour Force Survey.
23
Chart 19: Private sector dependent employment Chart 20: Total, youth unemployment rate and share
flows of long-term unemployed
(cumulative net flows; number of new jobs) (in percent)
Source: ERGANI. Source: ELSTAT, Labour Force Survey.
4. PRICES
Chart 21: Inflation (in percent) Chart 22: HICP and main contributions
Sources: ELSTAT and Bank of Greece calculations. Source: ELSTAT and Bank of Greece calculations.
24
Chart 23: Determinants of domestic inflation Chart 24: House price index
(index 2007=100 and annual percentage change)
Source: ELSTAT and Bank of Greece calculations. Source: Bank of Greece.
Chart 25: Prime Retail Price and Rent Indices Chart 26: Prime Office Price and Rent Indices
(indices 2010=100) (indices 2010=100)
Source: Bank of Greece. Source: Bank of Greece.
25
5. EXTERNAL BALANCES
Chart 27: Current account balance Chart 28: Trade in goods balance
(% of GDP, dotted line: 4-quarter average) (% of GDP)
Source: Bank of Greece, BoP statistics. Source: Bank of Greece, BoP statistics.
Chart 29a. Exports of goods Chart 29b. Imports of goods

(value in EUR million; price deflator for volume: PPI (value in EUR million; price deflator for volume: IPI)
for the external market )
Sources: Bank of Greece (BoP statistics) and Sources: Bank of Greece (BoP statistics) and
ELSTAT (for the price index). ELSTAT (for the price index).
26
Chart 29c. Exports of oil Chart 29d. Imports of oil
(value in EUR mn; price deflator for volume: PPI (value in EUR mn; price deflator for volume:
for the external market for petroleum products) weighted average of IPI for crude oil
and petroleum products)
Sources: Bank of Greece (BoP statistics) and Sources: Bank of Greece, (BoP statistics) and
ELSTAT (for the price index). ELSTAT (for the price index).
Chart 30a: Exports of goods Chart 30b: Non-oil exports of goods

(cumulative, EUR mn, 2010 prices, deflator: PPI for the (cumulative, EUR mn, 2010 prices, deflator: PPI for the
external market) external market)
Sources: Bank of Greece (BOP statistics) and ELSTAT Sources: Bank of Greece (BOP statistics) and ELSTAT
(PPI). (PPI).
27
Chart 30c: Exports of goods (nominal, seasonally Chart 30d: Exports of goods (real, seasonally
adjusted) adjusted)
(Index 2009=100) (Index 2009=100)
Sources: Bank of Greece, Balance of Payments Sources: Bank of Greece, Balance of Payments
statistics. Eurostat for EA19. statistics. Eurostat for EA19.
Chart 30e: Exports of goods and services (real, Chart 30f: Exports of services (real, seasonally
seasonally adjusted) adjusted)
(Index 2009=100) (Index 2009=100)
Sources: Bank of Greece, Balance of Payments Sources: Bank of Greece, Balance of Payments
statistics. Eurostat for EA19. statistics. Eurostat for EA19.
28
Chart 30g: Real exports of goods and services
(index 2009=100, sa)
Source: ELSTAT, National Accounts.
Chart 31: Greek goods export market shares Chart 32a: Trade in services balance
((Imports from Greece as percentage of world imports; (% GDP)
Index 2000=100))
Source: IMF - Direction of trade statistics database. Source: Bank of Greece (BoP statistics).
29
Chart 32b: Exports and imports of services Chart 32c: Exports and imports of services
(in EUR mn - annual) (in EUR mn - quarterly)
Sources: Bank of Greece (BoP statistics) and ELSTAT Sources: Bank of Greece (BoP statistics) and ELSTAT
(for the price index). (for the price index).
Chart 32d: Travel Receipts Chart 32e. Transport receipts

(cumulative, EUR mn, current prices) (cumulative, EUR mn, current prices)
Sources: Bank of Greece (BOP statistics). Sources: Bank of Greece (BOP statistics).
30
Chart 33b: Euro area countries: Unit labour cost
Chart 33a: Greece: Price and cost competitiveness competitiveness indices (index 2000=100; quarterly,
indices (index 2000=100; quarterly, period averages) period averages)
Sources: ECB, Harmonized Competitiveness Indicators Sources: ECB, Harmonized Competitiveness Indicators
(effective exchange rates). based on ULC in total economy.
6. FISCAL
Chart 34: General Government Primary Budget Chart 35 : Gen. Government gross Debt to GDP ratio
Balance under the programme definition (% of GDP) decomposition (percentage points)
Source: Ministry of Finance. Source: Ministry of Finance.

Note: The definition of the primary budget balance under * projections as published in MTFS 2018-2021.
the programme deviates substantially from the EDP. Most
notably, it excludes the cost of the banking support, SMP/
ANFA profits-related transfers from Member States and
some privatisation revenues.
31
Chart 36: General Government deficit, primary deficit Chart 37: General Government stock of arrears (incl.
and debt (% of GDP) tax arrears) (EUR mn)
* projections as published in the MTFS 2018-2021. Source: Ministry of Finance.

Sources: ELSTAT, Ministry of Finance.
Chart 38a: Evolution of State budget balance against Chart 38b: Evolution of State budget primary
MoF's period targets in 2016-2017 balance against MoF's period targets in 2016-2017
Source: Ministry of Finance. Source: Ministry of Finance.
32
7. MONEY, CREDIT AND INTEREST RATES
Chart 39: Bank deposits* of non-financial Chart 40: Central bank financing to Greek commercial
corporations and households (in EUR bn) banks (in EUR bn, end of month)
*As of December 2016, deposits held in the Consignment Source: Bank of Greece.
Deposits and Loan Fund by the private sector (€4.2 bn) were
excluded from the outstanding amount of bank deposits, as the
institution has been reclassified from the financial sector to the
general government sector. The net flows of deposits are not
affected by such reclassifications.
Source: Bank of Greece.
Chart 41: Bank credit to households Chart 42: Bank credit to non-financial corporations
(in EUR bn and annual percentage change) (in EUR bn and annual percentage change)

33
Chart 43: Bank credit to non-financial corporations Chart 44: Small-scale Financial Conditions Index
and households (outstanding amounts in EUR bn)* (zero reflects long-run mean; an increase (decrease) reflects
improvement (deterioration). Last data point is provisional)
*As of December 2016, loans extended by the Consignment Deposits

and Loan Fund (housing loans: €3.6 bn and business loans: €0.2 bn)
were excluded from the outstanding amount of bank credit as the
institution has been reclassified from the financial sector to the general
government sector. Net flows and annual growth rates of bank credit
are not affected by such reclassifications.
Chart 45: Interest rate on new bank credit*: weighted Chart 46: Interest rate on new bank deposits with an
average of interest rates on the various loan agreed maturity offered to households (weighted
categories (annual percentages) average, annual percentages)
*Before June 2014 interest rates agreed in the context of most loan
modifications were recorded as interest rates on new lending. As of June
2014, interest rates in the context of loan modifications, if set below market
conditions in response to financial distress of the borrower, are no longer
reflected in the series for the bank lending rate.

34
Chart 47: Changes in banks' credit standards Chart 48: Changes in demand of non-financial
applied to the approval of term loans or credit lines enterpises for term loans or credit lines
to non-financial enterprises (average of responses) (average of responses)
Chart 49: Changes in the access of banks to market Chart 50: Change in the needs for bank term loans of
funding (average of responses) non-financial enterprises in Greece
(net percentage of firms*)
Source: Bank of Greece, ECB, Bank Lending Survey. Source: EC/ECB, Survey on the access of finance to
enterprises in the euro area.
35
Chart 51: Change in the availability of bank term Chart 52: GR NFCs bond index & iBoxx indices for EA
loans to non-financial enterprises in Greece non-financial corporates
(net percentage of firms*) (daily data; yields in percentage points)
Source: EC/ECB, Survey on the access of finance to Source: (GR index) Bank of Greece; (iBoxx indices)
enterprises in the euro area. Thomson Reuters, Datastream.
Chart 53a: Spreads of 10-year government bond Chart 53b: Spreads of 10-year government bond yields
yields over comparable Bunds (2010 to end-2013) over comparable Bunds (2014 to date)
(daily data; basis points) (daily data; basis points)
Source: Thomson Reuters, Datastream. Source: Thomson Reuters, Datastream.
36
Chart 54a: Athens stock exchange indices (2010 to Chart 54b: Athens stock exchange indices (2014 to
end-2013) (daily data) date) (daily data)
Source: Thomson Reuters, Datastream. Source: Thomson Reuters, Datastream.
37
Table 1: Main macroeconomic indicators for Greece
This update: 15 September 2017, Next update: 29 September 2017
2014 2015 2016 16Q3 16Q4 17Q1 17Q2 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17
1. Economic activity
Real GDP ELSTAT %y-o-y 0.4 -0.3 0.0 2.0 -1.0 0.4 0.8 … … … … … …
Real government consumption ELSTAT %y-o-y -1.2 0.0 -2.1 -1.3 -2.0 -1.9 3.3 … … … … … …
Real private consumption ELSTAT %y-o-y 0.6 -0.3 1.4 6.1 1.0 1.2 0.7 … … … … … …
Real gross fixed capital formation ELSTAT %y-o-y -4.4 -0.2 0.0 12.7 -14.0 10.8 -4.6 … … … … … …
Real exports of goods and services ELSTAT %y-o-y 7.7 3.1 -1.7 10.8 5.0 5.2 9.5 … … … … … …
Real exports of goods %y-o-y 4.1 8.6 3.0 8.3 -2.1 4.9 8.8 … … … … … …
Real exports of services %y-o-y 12.2 -2.7 -7.4 14.0 11.6 7.8 11.5 … … … … … …
Real imports of goods and services ELSTAT %y-o-y 7.6 0.3 0.6 13.9 3.5 11.7 3.1 … … … … … …
Real imports of goods %y-o-y 8.1 3.4 3.4 10.5 2.2 12.4 0.7 … … … … … …
Real imports of services %y-o-y 5.6 -11.7 -11.5 33.7 8.6 11.4 15.7 … … … … … …
Contribution to GDP growth (in GDP pts) ELSTAT
Domes tic demand (excl. inventories ) -0.4 -0.2 0.5 5.1 -1.6 1.6 0.7 … … … … … …
Net exports -0.2 0.8 -0.7 -0.8 0.3 -2.2 1.8 … … … … … …
Changes in inventories 1.0 -1.0 -0.1 -2.9 -1.7 1.2 -1.6 … … … … … …
OECD Leading Economic Activity Indicator OECD 100.3 100.0 101.4 101.2 100.2 99.7 99.8 99.7 99.7 99.8 99.8 99.8 …
Economic Sentiment Indicator EC 100.5 89.7 91.8 92.1 94.1 93.8 94.0 93.4 94.9 93.2 94.0 98.2 99.0
Consumer confidence indicator (% balance) IOBE/EC -54.0 -50.7 -68.0 -68.4 -65.0 -71.8 -70.2 -74.4 -72.2 -69.7 -68.8 -61.5 -57.0
Industrial confidence indicator (% balance) IOBE/EC -3.4 -16.6 -7.8 -6.2 -6.1 -5.6 -7.8 -6.7 -5.6 -10.4 -7.3 -2.7 -3.7
Industrial production (total industry) ELSTAT %y-o-y -1.9 1.0 2.5 2.0 3.8 9.4 2.9 10.1 0.8 6.3 1.8 1.7 …
Retail sales (total including fuel) ELSTAT %y-o-y -0.4 -1.5 -0.6 3.1 1.7 2.8 2.1 -1.2 2.1 0.3 3.9 … …
2. Prices and costs (annual % changes)
HICP ELSTAT %y-o-y -1.4 -1.1 0.0 0.2 0.2 1.5 1.3 1.7 1.6 1.5 0.9 0.9 0.6
GDP deflator ELSTAT %y-o-y -1.8 -1.0 0.1 -0.2 0.3 0.7 -0.6 … … … … … …
Profits (gross operating surplus) ELSTAT %y-o-y -3.9 -1.7 -3.3 -3.7 0.9 1.0 -0.7 … … … … … …
Real compensation per employee* ELSTAT %y-o-y 0.5 -1.3 1.3 0.8 0.9 -0.5 -1.1 … … … … … …
Unit labour costs, whole economy** ELSTAT %y-o-y -2.4 -2.2 2.1 0.3 2.0 1.7 0.9 … … … … … …
Compensation per employee %y-o-y -2.1 -2.9 0.8 0.7 0.9 0.8 0.1 … … … … … …
Labour productivity %y-o-y 0.3 -0.7 -1.3 0.4 -1.0 -0.9 -0.7 … … … … … …
Import price index (ind.goods) ELSTAT %y-o-y -3.7 -10.5 -2.8 -0.9 4.8 10.7 4.4 8.6 7.2 4.0 1.9 4.2 …
Export producer prices index (ind. goods) ELSTAT %y-o-y -2.7 -11.4 -6.8 -4.9 5.1 17.6 7.4 13.4 13.2 6.9 2.1 5.1 …
Industrial producer prices (total excl.constr.) ELSTAT %y-o-y -0.8 -5.8 -5.4 -4.8 -0.1 7.3 3.5 6.0 6.4 3.0 1.2 2.4 …
Res idential property prices BOG %y-o-y -7.5 -5.1 -2.4 -1.5 -1.0 -1.7 -1.2 … … … … … …
Commercial property prices : Retail BOG %y-o-y -1.8 -3.5 -0.4
Commercial property prices : Office BOG %y-o-y -3.5 -0.1 0.6
3. Labour market developments
Unemployment rate (% of labour force)(nsa) ELSTAT 26.5 24.9 23.6 22.6 23.6 23.3 21.1 22.7 21.4 21.6 20.0 … …
Total employment (nsa) ELSTAT %y-o-y 0.7 2.1 1.8 1.8 0.2 1.5 2.4 1.9 3.0 2.3 2.8 … …
Employees ELSTAT %y-o-y 2.3 3.7 3.1 2.6 0.3 1.0 2.7 … … … … … …
Hourly labour earnings (nsa)*** ELSTAT %y-o-y 0.5 -0.9 1.3 1.3 -0.7 1.0 0.6 … … … … … …
4. Balance of payments (BOG-Current Prices)
Exports of goods and services BOG %y-o-y 5.3 -8.9 -6.1 3.1 9.1 20.7 15.5 23.2 15.4 19.7 12.2 … …
Exports of goods %y-o-y -0.4 -7.5 -1.2 5.6 5.8 21.1 16.6 26.3 12.8 23.5 13.4 … …
Exports of services %y-o-y 10.7 -10.1 -10.4 1.8 13.9 19.9 14.4 17.6 19.5 15.6 11.4 … …
Exports of G&S as a percentage of GDP BOG 32.5 30.0 28.1 37.0 25.7 25.5 31.3 … … … … … …
Imports of goods and services BOG %y-o-y 3.1 -14.3 -4.2 13.6 5.1 20.0 11.0 24.4 15.4 19.7 12.2 … …
Imports of goods %y-o-y 2.9 -14.3 -2.3 9.6 4.3 21.8 9.5 27.0 1.8 18.0 8.6 … …
Imports of services %y-o-y 3.9 -14.0 -11.6 32.4 8.9 12.4 17.9 13.0 20.1 20.4 13.5 … …
Imports of G&S as a percentage of GDP BOG 34.7 30.2 28.8 26.8 30.9 35.5 31.0 … … … … … …
Current account balance (eur bn) BOG -2.9 0.2 -1.1 4.0 -2.3 -2.6 -0.2 1.3 -0.5 -0.6 0.8 … …
as a percentage of GDP -1.6 0.1 -0.6 8.5 -5.3 -6.4 -0.4 … … … … … …
5. Credit and financial indicators
M3 (broad money, without currency in circulation) BOG %y-o-y -2.2 -22.0 3.9 3.4 3.9 3.9 3.7 3.9 3.9 4.2 3.7 4.3 …
Credit to the private sector BOG %y-o-y -3.1 -2.0 -1.5 -1.7 -1.5 -1.3 -1.3 -1.3 -0.9 -1.0 -1.3 -1.2 …
3-month Euribor (%) Bloomberg 0.2 0.0 -0.3 -0.3 -0.3 -0.3 -0.3 -0.3 -0.3 -0.3 -0.3 -0.3 -0.3
10-year government bond yield (%) HDAT %y-o-y 9.6 8.3 7.0 8.3 7.0 7.0 5.4 7.0 6.4 6.1 5.4 5.3 5.4
Stock prices : ATHEX Composite Index ASE %y-o-y -28.9 -23.6 1.9 -13.6 1.9 15.4 51.9 15.4 22.0 19.8 51.9 42.2 43.0
6. General government finances (% of GDP)
Surplus (+) / Deficit (-) ELSTAT cumulative -3.7 -5.9 0.7 0.4 0.7 -0.5 … … … … … … …
Primary balance (surplus (+), deficit (-)) ELSTAT cumulative 0.3 -2.3 3.9 2.8 3.9 0.3 … … … … … … …
Consolidated gross debt ELSTAT cumulative 179.7 177.4 179.0 176.9 179.0 171.4 … … … … … … …
Al l Na ti ona l Accounts va ri a bl es on a qua rterl y frequency a re s ea s ona l l y a dj us ted by ELSTAT. Na ti ona l Accounts ba s ed defi ni ti ons for empl oyment.
Empl oyment da ta on a qua rterl y frequency a re s ea s ona l l y a dj us ted by Euros ta t. Confi dence i ndi ca tors a re net percenta ge ba l a nces of pos i ti ve a nd nega ti ve
repl i es to ea ch s i tua ti on des cri bed by the va ri a bl e.
* Defl a ted wi th pri va te cons umpti on defl a tor.
** Euros ta t defi ni ti on.
*** ELSTAT "I ndex of Wa ges " for the tota l economy excl udi ng a gri cul ture a nd pri va te hous ehol ds .
(*) Duri ng the peri od 29/6/2015-31/7/2015 the Athens Excha nge wa s cl os ed due to the ba nk hol i da y
38
Table 2: Key indicators for Consumption in Greece This update: 15 September 2017, Next update: 29 September 2017
LTA 2014 2015 2016 16Q3 16Q4 17Q1 17Q2 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17
1. Private consumption 2001-2008
1.1 Private consumption ELSTAT % y-o-y 3.8 0.6 -0.3 1.4 6.1 1.0 1.2 0.7 … … … … … …
2. Disposable income of households and NPISH 2001-2008
2.1 Disposable income of households and NPISH (current prices) ELSTAT % y-o-y 6.8 -1.8 -4.5 -1.1 -2.3 0.1 -0.1 … … … … … … …
2.2 Real disposable income of households and NPISH ELSTAT % y-o-y 3.6 0.9 -3.0 -0.7 -2.1 0.4 -1.6 … … … … … … …
3. Retail sales sub-indices 2005-2008
3.1 General index ELSTAT % y-o-y 4.3 -0.4 -1.5 -0.6 3.1 1.7 2.8 2.1 -1.2 2.1 0.3 3.9 … …
3.1.1 General index (excluding automotive fuel) ELSTAT % y-o-y 3.0 -0.7 -0.5 0.5 3.7 2.4 2.4 2.5 -1.4 1.9 1.2 4.3 … …
3.1.2 Food-beverages-tobacco ELSTAT % y-o-y 3.8 0.5 -2.1 0.0 1.9 3.1 1.7 1.3 -4.9 2.1 0.8 1.0 … …
3.1.3 Clothing-footwear ELSTAT % y-o-y -0.6 5.4 7.9 5.4 15.3 1.4 4.9 3.5 2.6 -1.5 3.9 9.0 … …
3.1.4 Furniture, elct and household eqpt. ELSTAT % y-o-y 5.2 -1.4 -3.8 -1.2 4.2 -1.4 2.6 5.9 11.7 0.7 2.6 14.2 … …
3.1.5 Books, stationery, other goods ELSTAT % y-o-y 2.0 7.0 7.0 4.4 10.8 8.0 11.0 9.9 5.2 9.4 8.4 11.8 … …
3.2 New private passenger cars ELSTAT % y-o-y -1.3 30.1 13.8 10.7 16.8 4.0 37.8 4.0 45.2 -7.3 -5.3 30.6 35.1 37.7
4. Bank credit 2003-2008
4.1 Loans to househds for consumption purposes (nsa) BOG % y-o-y 24.2 -2.8 -2.3 -0.8 -0.7 -0.8 -0.7 -0.7 -0.7 -0.7 -0.6 -0.7 -0.5 …
5. VAT Receipts 2003-2008
5.1 In current prices MoF % y-o-y 7.3 -1.7 0.1 10.1 7.1 5.4 3.7 8.7 6.4 2.5 24.3 -1.4 4.0 …
5.2 In constant prices MoF % y-o-y 3.9 -0.4 1.9 11.0 8.1 5.9 2.3 7.4 4.6 0.9 22.8 -2.4 2.9 …
6.Confidence indicators 2003-2008
6.1 Consumer confidence IOBE/EC ind -34.5 -54.0 -50.7 -68.0 -68.4 -65.0 -71.8 -70.2 -74.4 -72.2 -69.7 -68.8 -61.5 -57.0
Present conditions
6.2 Major purchases at present IOBE/EC bln -45.0 -54.2 -59.3 -65.0 -68.0 -64.1 -64.6 -70.0 -68.1 -68.2 -71.3 -70.6 -67.2 -64.9
6.3 Savings at present IOBE/EC bln -57.8 -57.9 -60.8 -65.5 -66.1 -66.0 -69.9 -74.5 -70.7 -73.2 -74.9 -75.4 -69.6 -70.1
6.4 Statement on fin. situation of hsh. IOBE/EC bln -1.2 -17.1 -13.3 -15.5 -16.6 -16.5 -19.6 -19.8 -21.0 -21.9 -18.1 -19.5 -21.1 -20.1
Past 12 months
6.5 Financial situation over last 12 months IOBE/EC bln -30.0 -61.6 -57.7 -64.6 -63.5 -65.3 -67.6 -65.7 -73.0 -63.7 -66.3 -67.2 -59.2 -56.3
6.6 General economic situation over last 12 months IOBE/EC bln -37.6 -62.5 -67.5 -77.5 -75.9 -75.2 -77.6 -74.6 -80.5 -72.8 -74.3 -76.6 -70.0 -64.1
6.7 Price trends over last 12 months IOBE/EC bln 69.0 9.5 6.1 25.4 33.7 28.6 40.7 33.6 39.2 36.8 31.7 32.3 26.9 25.4
Next 12 months
6.8 Financial situation over next 12 months IOBE/EC bln -20.8 -44.9 -39.2 -60.4 -60.5 -57.2 -65.2 -63.5 -69.1 -63.8 -63.0 -63.7 -55.8 -48.5
6.9 General economic situation over next 12 months IOBE/EC bln -28.2 -45.6 -41.2 -70.3 -69.1 -63.3 -75.2 -74.4 -80.1 -74.7 -73.6 -74.9 -65.7 -54.0
6.10 Price trends over next 12 months IOBE/EC bln 30.2 -3.5 2.2 15.2 14.2 13.1 28.3 15.7 25.8 20.2 11.6 15.4 8.8 2.2
6.11 Unemployment expectations over next 12 months IOBE/EC bln 43.0 48.4 46.2 61.6 62.8 60.4 62.2 58.2 62.4 63.6 58.4 52.5 44.1 45.2
6.12 Major purchases over next 12 mn. IOBE/EC bln -27.8 -59.2 -63.3 -56.4 -56.2 -54.9 -60.5 -56.8 -65.1 -55.3 -57.3 -57.9 -60.3 -52.3
6.13 Savings over next 12 months IOBE/EC bln -45.9 -76.9 -76.3 -79.9 -81.3 -78.9 -84.8 -84.8 -86.1 -86.8 -83.6 -83.9 -80.6 -80.5
Confi dence i ndi ca tors a re net percenta ge ba l a nces of pos i ti ve a nd nega ti ve repl i es to ea ch s i tua ti on des cri bed by the va ri a bl e. For a l l i ndi ces except for thos e referri ng to the
unempl oyment ra te a nd pri ces , a hi gher va l ue s ugges ts a n i mprovement.
39
Table 3: Key indicators for Investment in Greece
1. Gross fixed capital formation ELSTAT %y-o-y 3.8 -4.4 -0.2 0.0 12.7 -14.0 10.8 -4.6 … … … … … …
1.1 Equipment 7.6 21.6 -2.6 -1.6 15.0 -19.0 58.3 -2.2 … … … … … …
1.2 Construction 1.2 -20.3 -1.1 2.1 10.6 -15.1 -9.6 -8.8 … … … … … …
2. Public Investment Programmme (nsa)
BOG %y-o-y … -0.9 -2.8 -1.8 35.8 -14.9 -36.9 -24.9 -12.7 -50.1 12.8 -18.6 -48.9 …
3. Capital goods production index (nsa)
ELSTAT %y-o-y -3.5 -2.2 2.3 2.9 16.6 6.3 16.9 -0.9 13.2 -1.9 3.6 -3.9 … …
4. Capacity utilization-capital goods industry (nsa)
IOBE/EC Ind 77.0 64.7 62.1 65.5 68.9 63.4 61.7 58.8 59.0 55.2 58.3 62.9 67.3 72.6
5. Cement Production (nsa)
ELSTAT %y-o-y -1.8 -3.4 3.6 23.6 40.8 17.4 9.2 -7.8 16.3 -11.7 -12.2 1.6 … …
6. Construction production index (nsa)
ELSTAT %y-o-y -5.8 15.5 3.1 22.9 76.8 18.6 9.8 -1.0 … … … … … …
7. Construction conficence indicator (sa) IOBE/EC bln -18.9 -22.1 -47.0 -47.4 -55.9 -55.0 -51.6 -58.8 -49.8 -53.5 -67.4 -55.6 -39.7 -49.2
7.1 Evolution of current overall order books -37.6 -52.0 -56.3 -62.7 -73.4 -63.4 -52.9 -62.8 -49.9 -57.3 -70.9 -60.3 -41.8 -50.6
7.2 Employment expectations over the next 3 months -0.2 7.9 -37.8 -32.1 -38.4 -46.6 -50.3 -54.8 -49.7 -49.6 -63.8 -50.9 -37.5 -47.9
8. New construction permits (nsa)
ELSTAT %y-o-y -1.9 -5.8 -0.2 -6.9 38.4 -9.5 16.7 32.0 71.0 22.1 52.7 25.1 … …
9. Housing loans (nsa)
BOG %y-o-y 22.2 -3.0 -3.5 -3.5 -3.4 -3.5 -3.3 -3.2 -3.3 -3.2 -3.1 -3.2 -3.1 …
10. Credit to non-financial corporations over 1 year (nsa)
BOG %y-o-y 25.8 -0.2 0.3 -0.1 -0.6 -0.1 0.1 1.2 0.1 1.1 1.3 1.2 1.0 …
*LTA over the period 2004-2008
Confidence indicators are net percentage balances of positive and negative replies to each situation described by the variable.
40
Table 4: Key indicators for Industry in Greece
1. Gross value added (at 2010 prices) 2001-08
1.1 Industry (Mining-Manufacturing-Electricity) ELSTAT %y-o-y 1.5 -6.0 0.3 1.6 0.8 2.0 7.9 5.7 … … … … … …
2. Industrial production 2001-08
2.1 General index ELSTAT %y-o-y -0.5 -1.9 1.0 2.5 2.0 3.8 9.4 2.9 10.1 0.8 6.3 1.8 1.7 …
2.1.1 Manufacturing -0.9 1.8 1.8 4.2 5.3 2.2 6.0 2.7 10.2 -0.3 5.3 3.0 1.3 …
2.1.2 Mining-quarrying -0.6 -0.3 -6.5 -14.7 -14.3 -3.9 12.5 6.8 37.5 14.6 8.3 -2.1 2.5 …
2.1.3 Electricity 1.0 -13.6 0.5 1.7 -4.1 12.0 22.6 4.9 5.5 3.7 12.6 0.1 3.8 …
2.1.4 Water supply 1.4 -0.5 1.9 0.4 1.3 0.8 1.2 -4.2 0.8 -4.0 -1.3 -6.9 -5.0 …
2.1.a Energy 0.8 -5.6 0.1 1.4 -1.7 6.1 16.5 6.9 15.5 6.2 7.5 6.9 1.3 …
2.1.b Intermediate goods -0.6 2.6 2.0 4.7 9.1 3.6 8.8 4.0 9.0 2.8 11.1 -1.1 4.2 …
2.1.c Capital goods -4.3 -2.2 2.3 2.9 16.6 6.3 16.9 -0.9 13.2 -1.9 3.6 -3.9 6.7 …
2.1.d Durable consumer goods -3.2 -6.8 2.4 -1.4 4.1 -6.9 8.7 2.2 15.0 -6.0 11.2 1.7 -7.8 …
2.1.e Non-durable consumer goods 0.0 0.3 1.3 2.3 0.4 0.0 -1.3 -2.2 3.8 -6.5 0.9 -0.9 -0.3 …
3. Industrial turnover (at current prices) 2001-08
3.1 Total market ELSTAT %y-o-y 5.2 -1.1 -5.0 -10.1 1.3 5.2 24.5 12.5 25.2 9.8 19.7 8.1 … …
3.1.1 Domestic market 5.0 -0.9 -9.4 -3.2 1.5 6.4 17.6 3.8 15.1 -5.2 14.8 2.3 … …
3.1.2 Νοn-domestic market 7.0 -1.3 -11.1 -7.4 1.0 3.5 33.7 25.5 38.3 33.4 26.3 17.2 … …
3.1.2.1 Euro area 5.3 -0.1 3.7 -5.8 -9.3 -0.3 18.3 16.8 41.8 22.2 28.6 1.0 … …
3.1.2.2 Νοn-euro area 10.0 -1.8 -17.1 -8.2 6.9 5.4 42.8 30.6 36.5 40.4 25.1 27.6 … …
4. Industrial confidence indicator 1990-08
4.1 Industrial confidence IOBE/EC ind 0.4 -3.4 -16.6 -7.8 -6.2 -6.1 -5.6 -7.8 -6.7 -5.6 -10.4 -7.3 -2.7 -3.7
4.1.1 Production expectations 25.5 16.8 -0.9 11.5 14.1 13.8 15.7 14.0 13.2 16.8 9.2 16.1 22.5 18.6
4.1.2 Order books -12.5 -21.9 -33.7 -22.2 -17.9 -19.9 -21.8 -25.5 -20.9 -23.6 -28.5 -24.5 -16.1 -16.2
4.1.3 Stocks of finished products 11.8 5.2 15.2 12.7 14.9 12.2 10.7 11.8 12.3 10.1 11.7 13.5 14.4 13.5
4.2 Employment expectations IOBE/EC ind -2.2 -2.9 -11.5 -5.6 -8.5 -4.1 2.2 3.3 2.7 -2.0 3.7 8.3 12.1 14.3
4.3 Export order books IOBE/EC ind -14.6 -17.4 -19.7 -12.6 -10.7 -9.5 -5.0 -7.4 -7.2 -10.1 -11.0 -1.2 3.4 0.1
4.4 Factors limiting the production
IOBE/EC bln … … … … … …
(% of firms answering "none") 57.3 38.1 31.8 35.7 37.2 40.8 40.4 37.7
5. Capacity utilization 1990-08
5.1 Capacity utilization IOBE/EC Ind 76.1 68.2 65.3 67.3 67.5 69.6 68.2 68.7 68.6 68.5 68.1 69.4 71.7 71.5
6. Purchasing managers index (PMI) 1999-08
6.1. PMI MARKIT Ind 52.6 49.9 45.4 49.2 49.4 48.7 47.0 49.4 46.7 48.2 49.6 50.5 50.5 52.2
6.1.1 Output 54.9 51.4 43.9 49.1 49.3 48.6 45.6 48.7 45.2 46.6 49.0 50.6 51.3 52.8
6.1.2 New Orders 53.7 50.8 41.8 47.6 48.4 47.7 45.2 48.2 44.7 46.0 48.1 50.4 50.0 52.2
6.1.3 Stocks of finished goods 47.8 44.4 43.6 46.5 47.2 45.8 45.7 48.1 47.1 47.0 48.2 49.0 50.3 49.6
6.1.4 Employment 50.6 48.8 46.8 50.6 51.3 50.2 48.6 50.6 49.1 49.6 50.2 51.9 51.7 53.3
6.1.5 Suppliers' delivery times 48.4 49.2 43.3 46.6 48.6 47.6 47.2 46.4 47.9 46.0 45.5 47.8 49.1 48.7
6.2 New Export Orders 53.5 50.0 42.0 48.7 50.4 47.6 43.8 47.2 43.4 44.7 47.2 49.8 49.5 51.1
Confi dence i ndi ca tors a re net percenta ge ba l a nces of pos i ti ve a nd nega ti ve repl i es to ea ch s i tua ti on des cri bed by the va ri a bl e. For a l l i ndi ces except for thos e
referri ng to the s tocks of fi ni s hed goods , a hi gher va l ue s ugges ts a n i mprovement.
41
Table 5: Key indicators for Services in Greece This update: 15 September 2017, Next update: 29 September 2017
1. Gross value added (2010 prices) 2001-2008
1.1 Tetriary sector ELSTAT % y-o-y 4.1 1.4 -0.3 -0.3 0.9 -0.3 0.0 -0.2 … … … … … …
2. Turnover indices (curr.prices) 2005-2008
2.1 Wholesale trade ELSTAT % y-o-y 10.8 0.2 -4.4 -1.6 2.8 -0.6 7.4 2.6 … … … … … …
2.2 Tourism (accmd & food serv.activities ) ELSTAT % y-o-y 4.7 11.8 3.1 0.2 2.9 4.0 1.0 7.3 … … … … … …
2.3 Transport ELSTAT % y-o-y
2.3.a Water transport % y-o-y 6.3 -8.1 -5.4 -4.6 -2.2 -11.5 -13.2 -11.4 … … … … … …
2.3.b Land transport % y-o-y 16.4 -4.4 -5.9 -2.1 2.7 -2.4 2.4 10.7 … … … … … …
2.3.c Air transport % y-o-y 7.0 7.1 7.8 3.9 7.4 5.3 3.5 -0.1 … … … … … …
2.4 Telecommunication ELSTAT % y-o-y 2.5 -4.3 -1.3 0.5 2.4 1.6 0.7 0.1 … … … … … …
2.5 Legal-accounting activities and management consultancy
ELSTAT % y-o-y 10.1 2.3 -12.7 -13.5 0.0 -22.8 2.5 4.5 … … … … … …
services
2.6 Travel agencies and other activities ELSTAT % y-o-y 12.7 6.4 -4.2 -4.0 1.4 -4.9 -4.3 8.8 … … … … … …
3. Bank credit 2003-2008
3.1 Loans to trade BOG % y-o-y 17.1 -1.3 -1.1 1.6 1.0 1.6 2.3 2.1 2.3 2.4 2.4 2.1 1.2 …
3.2 Loans to tourism BOG % y-o-y 20.8 -0.6 0.6 2.3 0.7 2.3 2.2 1.7 2.2 2.3 2.5 1.7 1.3 …
3.3 Loans to sole proprietors BOG % y-o-y … -0.3 -1.2 -1.9 -1.8 -1.9 -1.6 -0.4 -1.6 -1.1 -0.5 -0.4 -0.2 …
4. Confidence indicators 2003-2008
4.1 Retail trade confidence indicator IOBE/EC ind 17.4 -1.3 -10.3 6.8 10.8 10.5 5.8 0.4 2.7 3.0 1.5 -3.4 -1.3 -3.6
4.1.1 Present business situation bln 26.2 -8.0 -16.3 6.8 12.6 17.5 9.7 -4.8 3.9 1.0 -7.1 -8.4 -9.2 -14.7
4.1.2 Volume of stocks bln 14.3 -3.9 -7.1 -2.5 -4.6 6.4 10.4 -1.2 8.7 -3.5 -2.2 2.1 7.0 9.4
4.1.3 Expected business situation bln 40.4 0.2 -21.6 11.2 15.3 20.3 18.2 4.8 12.8 4.6 9.4 0.3 12.3 13.3
4.2 Services confidence indicator IOBE/EC ind 18.8 12.7 -11.9 -8.8 -6.4 0.6 1.8 9.8 6.6 8.9 11.5 9.0 17.4 22.9
4.2.1 Assessment of business situation over the past 3 months bln 18.2 11.0 -9.0 -10.6 -7.2 0.6 1.9 10.4 6.3 11.8 10.1 9.4 21.9 28.9
4.2.2 Evolution of demand over the past 3 months bln 17.6 11.2 -13.0 -11.9 -11.3 -0.4 1.0 9.3 9.1 5.2 14.1 8.7 13.4 19.5
4.2.3 Evolution of demand expected over the next 3 months bln 20.7 16.0 -13.7 -3.9 -0.8 1.5 2.4 9.6 4.3 9.8 10.1 9.0 16.7 20.2
Confi dence i ndi ca tors a re net percenta ge ba l a nces of pos i ti ve a nd nega ti ve repl i es to ea ch s i tua ti on des cri bed by the va ri a bl e. For a l l i ndi ces except for thos e referri ng to the s tocks of
fi ni s hed goods , a hi gher va l ue s ugges ts a n i mprovement.
42
Table 6: Business and consumer surveys (balances, seasonally adjusted data)
1. Economic sentiment indicator 2003-08
Economic sentiment indicator IOBE/EC 104.4 100.5 89.7 91.8 92.1 94.1 93.8 94.0 93.4 94.9 93.2 94.0 98.2 99.0
Industrial confidence indicator IOBE/EC -0.3 -3.4 -16.6 -7.8 -6.2 -6.1 -5.6 -7.8 -6.7 -5.6 -10.4 -7.3 -2.7 -3.7
Retail confidence indicator IOBE/EC 17.4 -1.3 -10.3 6.8 10.8 10.5 5.8 0.4 2.7 3.0 1.5 -3.4 -1.3 -3.6
Services confidence indicator IOBE/EC 18.8 12.7 -11.9 -8.8 -6.4 0.6 1.8 9.8 6.6 8.9 11.5 9.0 17.4 22.9
Construction confidence indicator IOBE/EC -14.1 -22.1 -47.0 -47.4 -55.9 -55.0 -51.6 -58.8 -49.8 -53.5 -67.4 -55.6 -39.7 -49.2
Consumer confidence indicator IOBE/EC -34.5 -54.0 -50.7 -68.0 -68.4 -65.0 -71.8 -70.2 -74.4 -72.2 -69.7 -68.8 -61.5 -57.0
2. Industrial confidence indicator
Production expectations IOBE/EC 22.8 16.8 -0.9 11.5 14.1 13.8 15.7 14.0 13.2 16.8 9.2 16.1 22.5 18.6
Order books IOBE/EC -11.6 -21.9 -33.7 -22.2 -17.9 -19.9 -21.8 -25.5 -20.9 -23.6 -28.5 -24.5 -16.1 -16.2
Stocks of finished products IOBE/EC 12.1 5.2 15.2 12.7 14.9 12.2 10.7 11.8 12.3 10.1 11.7 13.5 14.4 13.5
Purchasing managers index (PMI) MARKIT 52.1 49.9 45.4 49.2 49.4 48.7 47.0 49.4 46.7 48.2 49.6 50.5 50.5 52.2
3. Retail confidence indicator
Present business situation IOBE/EC 26.2 -8.0 -16.3 6.8 13.4 17.5 20.6 -4.8 3.9 1.0 -7.1 -8.4 -9.2 -14.7
Volume of stocks IOBE/EC 14.3 -3.9 -7.1 -2.5 -1.7 6.4 10.4 -1.2 8.7 -3.5 -2.2 2.1 7.0 9.4
Expected business situation IOBE/EC 40.4 0.2 -21.6 11.2 17.4 20.3 18.2 4.8 12.8 4.6 9.4 0.3 12.3 13.3
4. Services indicator
Business situation over the past 3m. IOBE/EC 18.2 11.0 -9.0 -10.6 -7.2 0.6 1.9 10.4 6.3 11.8 10.1 9.4 21.9 28.9
Demand over the past 3m. IOBE/EC 17.6 11.2 -13.0 -11.9 -11.3 -0.4 1.0 9.3 9.1 5.2 14.1 8.7 13.4 19.5
Expected demand over the next 3m. IOBE/EC 20.7 16.0 -13.7 -3.9 -0.8 1.5 2.4 9.6 4.3 9.8 10.1 9.0 16.7 20.2
5. Construction confidence indicator
Order books IOBE/EC -33.1 -52.0 -56.3 -62.7 -73.4 -63.4 -52.9 -62.8 -49.9 -57.3 -70.9 -60.3 -41.8 -50.6
Employment expectations IOBE/EC 4.9 7.9 -37.8 -32.1 -38.4 -46.6 -50.3 -54.8 -49.7 -49.6 -63.8 -50.9 -37.5 -47.9
6. Consumer confidence indices
Financial situation over next 12 mnths IOBE/EC -20.8 -44.9 -39.2 -60.4 -60.5 -57.2 -65.2 -63.5 -69.1 -63.8 -63.0 -63.7 -55.8 -48.5
Gen. econ. sit. over next 12 mnths IOBE/EC -24.5 -45.6 -41.2 -70.3 -69.1 -63.3 -75.2 -74.4 -80.1 -74.7 -73.6 -74.9 -65.7 -54.0
Savings over next 12 months IOBE/EC -8.2 -76.9 -76.3 -79.9 -81.3 -78.9 -84.8 -84.8 -86.1 -86.8 -83.6 -83.9 -80.6 -80.5
Unemployment over next 12 months IOBE/EC 43.0 48.4 46.2 61.6 62.8 60.4 62.2 58.2 62.4 63.6 58.4 52.5 44.1 45.2
Confi dence i ndi ca tors a re net percentage ba l a nces of pos i tive a nd nega tive repl i es to ea ch s i tua tion des cri bed by the va ri a bl e. For a l l i ndi ces except for thos e
referri ng to the s tocks of fi ni s hed goods a nd the unempl oyment ra te, a hi gher va l ue s ugges ts a n i mprovement.
43

Note On The Greek Economy - 2017!9!2 - Final

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Note On The Greek Economy - 2017!9!2 - Final

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September 15, 2017

Economic Analysis and Research Department

Recent Economic Developments

Monetary & Financial

Monetary & Financial

1. OUTPUT, DEMAND AND CONJUNCTURAL INDICATORS

Medium-term trends and outlook

2. PRIVATISATIONS AND STRUCTURAL REFORMS

Medium-term trends and outlook

3. LABOUR MARKET AND COSTS

Medium-term trends and outlook

Medium-term trends and outlook

5. EXTERNAL BALANCES, COMPETITIVENESS

Medium-term trends and outlook

Medium-term trends and outlook

7. MONEY, CREDIT AND FINANCIAL MARKETS

Medium-term trends and outlook

Medium-term trends and outlook

1. OUTPUT, DEMAND AND CONJUNCTURAL INDICATORS

2014 2015 2016 2017

2014 Q1 Q2 Q3 Q4 2015 Q1 Q2 Q3 Q4 2016 Q1 Q2 Q3 Q4 Q1 Q2

Table 2: Value added decomposition, seasonally adjusted

2014 2015 2016 2017

2014 Q1 Q2 Q3 Q4 2015 Q1 Q2 Q3 Q4 2016 Q1 Q2 Q3 Q4 Q1 Q2

(change over previous period)

2016 2017f 2018f 2019f

GDP (constant prices) 0.0 1.6 2.4 2.7

Private consumption 1.4 1.1 1.4 1.3

Government consumption -2.1 1.4 -0.2 1.8

Gross fixed capital formation 0.1 5.6 10.1 11.6

Exports of goods and services -2.0 5.5 4.7 4.3

Imports of goods and services -0.4 4.4 4.1 3.9

Changes in inventories -0.1 -0.3 0.1 -0.1

HICP 0.0 1.2 1.1 1.2

HICP excluding energy 0.5 0.7 1.1 1.2

Total employment 1.8 1.5 2.0 2.3

Unemployment rate (% of labour force) 23.5 22.4 20.9 19.1

Current account (% of GDP) -0.6 0.4 0.3 0.5

Sources: ELSTAT and BoG.

Table 4: Projections for Greek GDP by international organizations

OECD June 2017 0.0 1.1 2.5

European Commission May 2017 0.0 2.1 2.5

April 2017 0.0 2.2 2.7

Chart 4: Household disposable income and

Source: ELSTAT, non-financial accounts of institutional

Source: European Commission. Source: Markit.

Sources: ELSTAT (for industrial production index)

Sources: ELSTAT (for volume of retail sales excl. fuel)

Sources: Frontier Survey of the Bank of Greece

2. STRUCTURAL REFORM INDICATORS

Sources: OECD, EPL index (version 3) and BoG calculations.

3. LABOUR MARKET AND COSTS

Chart 17: Monthly unemployment rate Chart 18: Employment changes

Source: ERGANI. Source: ELSTAT, Labour Force Survey.

Source: ELSTAT and Bank of Greece calculations. Source: Bank of Greece.

Source: Bank of Greece. Source: Bank of Greece.

Chart 29a. Exports of goods Chart 29b. Imports of goods

Chart 30a: Exports of goods Chart 30b: Non-oil exports of goods

(index 2009=100, sa)

Source: ELSTAT, National Accounts.

Chart 32d: Travel Receipts Chart 32e. Transport receipts

Source: Ministry of Finance. Source: Ministry of Finance.