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GREECE


 

 

In-depth Business Intelligence

Key Economic Data 
 
  2003 2002 2001 Ranking(2003)
GDP
Millions of US $ 173,000 132,834 117,200 27
         
GNI per capita
 US $ 13,720 11,660 11,430 45
Ranking is given out of 208 nations - (data from the World Bank)

Books on Greece

REPUBLICAN REFERENCE

Area (sq km)
131,940

Population 
10,647,529

Capital 
Athens

Currency 
Euro

President 
Costas 
Stephanopoulos

Private sector 
% of GDP
over 60%



Update No: 104 - (01/01/06)

EU report positive for Greece
The conservative government of Prime minister, Costas Karamanlis, has received an unexpected endorsement from the European Union (EU). The European Commission's annual report (covering up to 2007), which was released in Brussels recently pointed out the uphill task of fiscal deficit reduction, but predicted a strong rate of development of the Greek economy. Moreover, the unemployment and inflation rates are also set to come down, according to the report.
The report said it expected GDP growth of 3.5 per cent in 2005, with average inflation at 3.5 per cent and a budget deficit of 3.7 per cent of GDP, when the proceeds from securitisation of public debt are included in budget revenues. On the other hand, the report refused to include proceeds from securitisation in 2006 calculations and projected the deficit at 3.7 per cent of GDP. For the same period inflation was expected to be 3.1 per cent and GDP growth set to touch 3.4 per cent.
This is the best growth prospect for any Euroland member apart from Ireland, on present form.
The report was naturally welcomed in Athens, where government sources immediately started harping on the improvement in the country's fiscal situation in 2005 and said they anticipated further progress in 2006. But there is a flip side to it, as the Finance Minister, Giorgos Alogoskoufis, recently had said Greece would not include securitisation of debt in its official 2005 and 2006 budgets and thus the deficit could skyrocket to 4.4 per cent this year, while the target for 2006 would remain at 2.6 per cent of GDP.
According to fiscal pundits there is something to rejoice, as the 2005 prediction became the lowest deficit in recent decades. According to figures released by Eurostat, the Greek fiscal deficit for the period 1991-1995 stood at 11.5 per cent of GDP, while it fell to 5.2 per cent in 1996-2000, and fluctuated around 6.1 per cent in 2001, 4.9 per cent in 2002, 5.7 per cent in 2003 and 6.6 per cent in 2004.
Another factor with a silver lining from Eurostat data was a decline in public sector debt, which was expected to close at 107.9 per cent of GDP in 2005, at 106.8 per cent in 2006, and at 106.0 per cent in 2007.
With respect to unemployment, Eurostat predicted it would close at 10.4 per cent in 2005, declining to 10 per cent in 2006 and to 9.7 per cent in 2007.
On inflation, Eurostat predicted it would close at 3.5 per cent in 2005, and decline to 3.1 per cent in 2006 and three per cent in 2007. 
Commenting on the report, European Commissioner for Economic and Monetary Affairs, Joaquin Almunia, said that the forecast for the Greek public deficit figure is based on the working assumption that the Greek government's debt securitisation plan will be approved by Eurostat. The Commissioner did agree that Greek authorities, being in a tight corner all this while, had based their official forecast on a "worst-case scenario" in which Eurostat completely rejected Greek debt securitisation plans. Almunia, however, hoped that the situation would clarify in the coming weeks since Eurostat was due to complete its analysis of the Greek proposals before the year-end. Moreover, the Commissioner did elaborate that securitisation schemes and other temporary measures had not been taken into account by either the Greek government or the European Commission in the forecasts for 2006 and 2007, but concluded that these factors would be presented once Eurostat's decision was known.

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Nevertheless, there is another aspect of Greece's relationship with the EU that needs addressing, as the following editorial syndicated by in a daily.com, from International News Alliance, to leading newspapers, including The International Herald Tribune and El Pais. Its views have a wide resonance. A viewpoint can be as interesting for who espouses it as for what they say:-

Making use of EU money
Greece's foot-dragging in absorbing funds from the European Union's Third Community Support Framework (CSFIII), a performance that puts the country at the bottom of the EU's related table, is a cause for serious concern. Greece cannot afford to squander a cent of these much-precious funds. At present, the best the conservative government can do is to mobilize the responsible institutions and find ways to keep the losses at a minimum.
It is worth noting that just one year before the expiration of the EU deadline (in fact, countries are granted an extra two-year period to complete the process), Greece's absorption rate is stuck at a paltry 36 per cent. The truth is that the absorption rate tends to climb in the final years as bureaucracy occupies the early years of the process. Nevertheless, both the overall absorption rate as well as the rates for each individual program ought to stand at far higher levels.
Depressingly, rates are the lowest in business programs that are vital for the country's modernization and economic competitiveness. The absorption rate for the Information Society project now stands at 22 per cent. Business programs for the environment, education, railways and many regional projects also score poorly.
In an attempt to avert any further losses, the Economy Ministry had to transfer 500 million euros from sluggish programs to more receptive projects. However, even that trick has its limits. After all, the point is not just to absorb EU funds but to invest money in such a manner as to spur growth and boost employment.
The truth is that much of the blame for the current situation lies with the previous administration. But the current administration is not without blame. For that reason, Costas Karamanlis and his ministers must step in to break the inertia and cut through red tape. Furthermore, the administration must shake up the responsible institutions so as to enable the preparation of more credible programs and their swift implementation.
The government cannot do miracles - especially under the pressure of time. This means that the government will have to ask for help from experts in the private sector. Proper collaboration would not just accelerate the absorption rate, but also inject the state apparatus with the much needed know-how.

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On what might appear a more frivolous note we append the following. But it should be remembered that businessmen, and even businesswomen, take golf very seriously, whether European, North American or Japanese:-

Teeing off for golf tourism 
By Nikos Michaelian, Athens 
In line with the Greek government's efforts to promote high-quality, year-round tourism, the development of golf resorts with state-of-the-art leisure facilities is being given top priority. This long-neglected sector is now beginning to attract major attention from Greek and foreign investors, encouraged by recently passed legislation providing such incentives as subsidies and tax breaks. Despite the country's mild weather and stunning scenery, there are only six courses for golf enthusiasts to choose from: one in Athens, another on Corfu, one on Rhodes, another on the Chalcidice peninsula in northern Greece and two on Crete. This is all about to change within three years. As many as 11 resort complexes, to include one or more 18-hole golf courses costing from 100 million to 1.2 billion (US$117 million to US$1.4 billion), are now under development. 
According to Minister of Tourism, Dimitris Avramopoulos, the staging of the successful 2004 Olympic Games pushed Greece more into the tourist destination spotlight, but the country cannot envisage high-quality tourism without huge investments in golf courses, surrounded by sprawling luxury hotel and villa complexes. The minister, senior officials and industry leaders agree that a largely untapped potential for development exists in integrated resorts, combining health tourism (spas and thalassotherapy), conference centres, marinas, residential tourism (real estate sales or leases) and casinos and sports, including golf.
In his role as president of the Hellenic Golf Federation, Petros Doukas, deputy minister of economy and finance, has long championed golf as an investment opportunity. Enthusiastic about the potential of golf, he says, "Greece is going to expand its golf industry to help promote tourism and sports in an eco-friendly manner. Just lying on the beach is not enough anymore. We have to diversify our tourism product." Recent legislation is meant to remove bureaucracy roadblocks, which have, until now, discouraged investors, he says. Several new projects that will take advantage of Greece's generous investment incentives will be built in spectacular locations steeped in history and culture. These projects are being built by companies from Britain, the United States, Belgium, Switzerland, Cyprus, Australia and Greece.
Navarino Resorts, which is being developed by Tourism Enterprises of Messinia, an Athens-based company controlled by the Constantakopoulos shipping family, consists of two luxury golf resorts near the historic bay of Navarino on the southwest Peloponnese. Troon Golf, a high-end golf development, marketing and management company based in the United States, will manage the initial two championship courses. These will be designed by the California-based golf course architect Robert Trent Jones II Inc. and the renowned German golf player Bernhard Langer, together with European Golf Design (EGD). When completed in 2015, the 1 billion project will include a large conference centre, 12 luxury hotels and 320 villas, making it Greece's premier golf destination, with seven courses within close proximity. The first two hotels will be managed by the Swiss-based Kempinski Hotels and the Singapore-based Banyan Tree luxury hotel chain. Achilleas Constantakopoulos says that residential homes attract returning tourists and contribute to year-round tourism.
Meanwhile, in Thesprotia in northwestern Greece, the Belltower Golf and Residential Development, an integrated tourism and real estate resort, is being developed by the Sydney-based Glen Alpine International. The golf course architect Antony Cashmore & Associates and the resort architect Malcolm Davidson from Australia are involved in the project, which will include an 18-hole golf course. The resort will be managed by the Greek-Australian company Albatross Investments and Developments. Napoleon Tsanis, president and CEO of Albatross, says the resort will tap into the region's unspoiled beauty, encompassing sandy beaches and ecotourism. Meanwhile, the British developer Minoan Group PLC is building one of the largest resort complexes in Greece. Cavo Sidero, a 1.2 billion luxury complex in northeastern Crete, will have two 18-hole golf courses central to other sport and leisure activities. Minoan has signed a management deal with PGA Golf Management for the courses to be designed by European Golf Design Ltd.
In central Greece, the Greek-Cypriot Paraskevaides Group (which owns the luxury Ledra Marriott hotel in Athens) is developing the 250 million, multicomponent Apollo Golf and Spa Resort. The project includes a conference centre and an 18-hole golf course. In southern Crete, Greenwell of Belgium is financing a 270 million resort in Matala, including two golf courses, five-star hotels and a residential complex.
 

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AVIATION

Greece to create new airline, "Olympic Air"
 

Greece said it will create a new private national airline which will take over its cash-strapped predecessor, state owned Olympic Airlines, by spring 2006, the transport ministry said recently, New Europe reported. 
Greek Transport Minister, Michalis Liapis, said the government decided to create a new smaller airline, with the name "Olympic Air," after an international competition to privatise the airline fell through. He said Olympic Airlines will continue flying until the new airline is off the ground, probably by the spring of 2006. The government said privatisation talks with a consortium made up of Greek investment company Olympic Investors and its US partner York Capital Corp broke down after the consortium refused to take on the airline's debt, including fines of more than 500 million Euro issued by the European Union. 
The European Union in September ruled that Olympic Airlines and its predecessor Olympic Airways unfairly received benefits amounting to 540 million Euro in illegal state subsidies. The Commission has yet to decide how much of that money should be repaid to the Greek government. The government said it will hold cabinet talks on how to cover Olympic Airlines' debt over the next weeks. Liapis said the new company will be made up largely of private investors with a government share of 34 per cent. "The new airline will only have 30 aircraft and will offer limited destinations within Greece, Europe and the Middle East," he said. 
He said only 3,500 of the current 7,000 employees will be hired by the new company, with the remaining receiving early retirement.

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BANKING

NBG's 87% increase in 9-mo net earnings
 

The National Bank of Greece reported an 87 per cent surge in net earnings to 531.9 million Euro, with NII growing 16.5 per cent to 1233.4 million Euro, commissions increasing seven per cent to 314.1 million Euro and total operating expenses decreased by 3.9 per cent year-on-year. NBG's bottom line came in six per cent above Marfin's forecasts of 500.5 million and consensus estimates (Bloomberg poll) of 502.1 million Euro. The results were boosted by high income from financial transactions, which soared 72.6 per cent to 142.4 million Euro. Core EBT (ie EBT excluding income from financial transactions) jumped 62.7 per cent year-on-year to 592.2 million Euro, slightly exceeding estimates by 1.1 per cent. Net interest income slightly exceeded Marfin's initial estimates by 0.9 per cent, while fee & commission income came in slightly lower than their estimates (1.4 per cent), New Europe reported.
Lending growth continued strongly with total loans 17.5 per cent year-on-year, retail loans up 25.3 per cent year-on-year, while the loan book in SE Europe expanded 75 per cent approaching almost two billion Euro. Cost reduction was a very important driver of results according to the bank statement. The cost to income ratio was reduced to 53.6 per cent from 64.9 per cent in 9M:04. ROE improved to 29.5 per cent, but is affected by the level of financial gains. The NIM continued to expand driven by the lending mix effect reaching 3.41 per cent in Q3 from 3.1 per cent in Q2. Management reiterated NBG's interest for the broader SE European region saying that they are exploring and stepping up investments in the region.

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CREDIT RATINGS

Fage Dairy Industry cut to B
 

Standard & Poor's Ratings Services said recently that it has lowered its long-term corporate credit rating on Greece-based dairy company Fage Dairy Industry S.A. to 'B' from 'B+'. The outlook is negative. "The downgrade reflects the company's continued operating pressures and the upward revision of planned capital expenditures," said Standard & Poor's credit analyst, Benedetta Rospigliosi, New Europe reported. 
"The negative outlook reflects the further deterioration of Fage's financial profile and our expectation that the recently announced 50 per cent increase in planned capital expenditures will challenge the company's ability to internally fund its development and shareholder remuneration," said Rospigliosi. 
"Importantly," added Rospigliosi, "we also assume that the Filippou family's other business interests will not result in a cash drain on Fage's liquidity position, apart from the above-mentioned shareholder payments. Any evidence to the contrary would have a negative credit impact on the company." 

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FOREIGN INVESTMENT 

Chinese firms eager to see Crete cargo centre
 

Chinese companies, including shippers, have shown strong interest in construction of a cargo transit centre in the island of Crete, Merchant Minister, Manolis Kefaloyiannis, said at a news conference recently, New Europe reported.
"There is intense interest from China and from Chinese companies for the development of a joint investment with Greece and the creation of a new port station in Crete, which would be the size of Piraeus," Kefaloyiannis said. "About one million containers will arrive at the port annually."
Recently, the chairman of the China Shipping Group, Li Ke Lin, wrote to the government after a tour of the southern Aegean island and other Mediterranean and European countries, saying that Crete would make an excellent location for a centre to cover the eastern Mediterranean, the Black Sea and the Adriatic, due to its location.
"The investment will proceed immediately, and we are studying the possibility of making it through a cross-state agreement between Greece and China...The port will be in Tymbaki, on the southern coast of Crete," the minister said.
Ke Lin, who headed the nine-member delegation to sound out Crete for a port, is also deputy president of China Shipping Container Line Co Ltd. "Due to a dizzy rise in the volume of China Shipping's containers, and in the company's services based in the Far East and the Mediterranean, creation of a transit centre in the Mediterranean is an item on our agenda," Ke Lin said in his recent letter to Kefaloyiannis and released by the ministry. Also taking part in the trip were the chairman of China Shipping Europe (Holding) Co Ltd, Yu Zenggang; the head of the China Shipping Group's Mediterranean office, Zhu Jinze; and executives of the Hongkong International Terminal.

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TOURISM

Tour operators were also pleased with the Greek tourism industry
 

Minister of Tourism Development, Dimitris Avramopoulos, concluded his series of meetings in London recently, deeply satisfied with the performance of the Greek tourism sector, New Europe has reported.
Tour operators were also pleased with the Greek tourism industry, as a result of the ministry's efforts, Avramopoulos told Greek correspondents. He also announced that the wax figures of former Greek politicians - Eleftherios Venizelos, Constantine Karamanlis and Andreas Papandreou - will soon grace London's Madame Tussaud museum. Avramopoulos noted that this event, the result of his ministry's efforts, is particularly important given that there was no Greek presence in the museum prior to this.

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TRANSPORT

New tunnel on border 


Greek president, Karolos Papoulias, and his Bulgarian counterpart, Georgi Purvanov, will inaugurate a tunnel constructed to facilitate the opening of the new border crossing between the two countries at Exochi, in Drama, in the near future, New Europe reported.
The two Presidents will meet in the middle of the road tunnel, which has been named the Greek-Bulgarian Friendship Tunnel, for the inauguration ceremony. Earlier in the day, deputy foreign minister, Evrypides Stylianidis, and his Bulgarian counterpart will sign the relevant inter-state agreement. The new Ilinden-Exochi border crossing will link Drama with the neighbouring Bulgarian city of Goce Delcev. The construction of the tunnel was necessary in order to protect a rare species of bears, the brown bear or ursus arctos that lives and reproduces in the area, specifically Rodopi.
Environmental organisations had taken recourse against the initial plans for the construction of a road link, without a tunnel, warning it would have negative repercussions to reproduction in the bear population. The tunnel was added in the revised plan for the link, thus solving the problem. The tunnel was constructed with 10 million Euro financing from the European Union.
The initial agreement for the opening of the new border crossing was signed in 1995. It is the first of three new border checkpoints between Greece and Bulgaria provided for in the bilateral agreement, aimed at alleviating congestion at the other busy border posts between the two countries. The other two future border crossings will connect Komotini with Kurdzhali, and Xanthi with Rudozem. 

 

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