Our comprehensive assessment of Greece's operating environment and the outlook for its leading sectors are formed by bringing together a wealth of data on global markets that affect Greece, as well as the latest industry developments that could impact Greece's industries. This unique integrated approach has given us an impeccable track-record for predicting important shifts in the markets, ensuring you’re aware of the latest market opportunities and risks in Greece before your competitors.
Greece Country Risk
A nascent economic recovery will be delayed until at least 2016 in Greece, as uncertainty surrounding the country's bailout negotiations destroys consumer and business confidence.
Greece and its creditors should eventually compromise in its bailout negotiations, unlocking the final tranche of the country's bailout. This should prevent a Greek exit from the eurozone in 2015, although the ruling Syriza administration is unlikely to survive in its current form until the end of the year.
Deposit flight from the banking sector will continue, hindering bank lending. This should not cause a liquidity crisis in the sector, so long as the European Central Bank (ECB) continues providing the country with Emergency Liquidity Assistance (ELA) funding (as we expect).
Greece Industry Coverage (16)
BMI View: Domestic demand weakness amid the ongoing economic turmoil will continue to weigh on the country's livestock sector. We are also bearish on the country's sugar production outlook over the coming years. The abolishment of the EU sugar quota in 2017 is likely to lead to further declines in sugar prices, weighing on producers' willingness to increase sugar output. Meanwhile, the removal of the EU's milk quota is unlikely to result in a significant increase in milk production in Greece, since the country has been producing less than what the quota has allowed.
Poultry consumption to 2019: up 17.2% to 201,500 tonnes. The cheaper price of poultry meat...
The new passenger car market rose by 21.6% in May compared with the same period the year before. Since the beginning of 2015, 34,142 new passenger cars have been registered as compared with 29,505 the same period last year. The significant increase in passenger car sales is mainly due to the sharp rise for rental cars as the tourist season has just began.
In 2014, passenger car sales increased 21.3% to 71,218 units. BMI attributes this growth over the year to low base effects and pent-up demand in the market following years of sustained declines. The recovery of the country's autos market has continued despite sustained weakness in the country's economy.
The commercial vehicle (CV) market turned negative in May 2015 compared with the same month last year, declining 31.4%. Since January 2015, 147 units have been registered as compared with 124 the year before, suggesting an...
Defence & Security
Greece Defence & Security
BMI View: The report discusses Greece's strategic situation, including its fractious relationship with Turkey, its relations with NATO and other European nations, and its global relations and participation in military operations around the world. In terms of procurement, the report examines Greece's current defence programmes, planned acquisitions and future procurement aspirations in light of the country's economic crisis.
BMI expects Greece to spend USD6bn on defence in 2014. On average, between 2011 and 2013, Greece spent USD6.2bn annually on defence. Spending has progressively declined as the Greek economy has contracted and the government has sought to bring public spending under control. We expect Greece to spend less on defence between 2015 and 2019, spending an average of USD5.5bn. By 2019 we expect Greece to be spending USD5.6bn on...
Food & Drink
Greece Food & Drink
BMI View: Private consumption looks set to be the main driver of real GDP growth over 2015 and 2016, adding an average of 0.7 percentage points to growth according to our forecasts. Although an improvement, this will mainly reflect base effects from extremely weak consumer spending in years gone by. It also assumes consumer confidence should improve in 2016 after the government agrees a bailout renegotiation with its creditors, ending the uncertainty surrounding Greece's continued position in the eurozone currency union.
Headline Industry Data (local currency)
2015 per capita food consumption = 0.1%; forecast compound annual growth rate (CAGR) 2014-2019 = +0.8%.
2015 alcoholic drink value sales = -1.3%; forecast CAGR 2014-2019 = +0.1%.
2015 soft drink value...
Greece Freight Transport
Freight Demand Picking Up Pace In 2015
Looking at specific Greek transport modes, the main feature of 2015 will be faster growth compared to 2014. All modes will experience cargo volume expansion in a range of roughly 2.0% to 6.0%, ahead of the general rate of expansion experienced in the slowly recovering Greek economy. As in recent years, the best performer will be the Port of Piraeus, lifted by new investment and its role as a European gateway. Foreign trade growth will accelerate to 3.5%, giving a positive boost to freight demand after years of contraction.
The Greek economy is recovering, but the transition seems to be from deep recession to weak growth with continuing downside risks. We now expect GDP to gain 1.2% in 2015, up from an estimate of 0.2% positive growth in 2014, which itself came after six consecutive years of contraction (2008-2013). The problem is that the growth drivers are...
BMI View: The outlook remains extremely poor for Greece's construction industry, despite the recent government agreement to a series of privatisations as part of the ongoing debt renegotiations. The far-left Syriza party remains largely opposed to privatisation and the recent concessions could result in greater fractions within the party, thereby increasing political uncertainty and further undermining investor confidence in an already weak market. Early indications for 2015 show the construction sector continues to contract and while we currently forecast an overall contraction of 17.4% for the year we caution this figure may be subject to downwards revision over the coming months, particularly in light of the collapse of the residential construction...
BMI View: Greece's insurance sector is, and will remain, under-developed by many metrics. While premiums are no longer falling off a cliff as they have done in many segments in recent years, our outlook for both the life and non-life sectors is overwhelmingly bearish. A gradual acceleration in economic growth aside, the country's lingering debt crisis, coupled with the traditional aversion of Greek citizens to many forms of insurance products, will continue to act as significant barriers in terms of penetration and density growth over our forecast period through to end-2019.
Barring a small number of exceptions, we believe that insurance premiums will largely stagnate over the next few years. In the very recent past, the...
Greece Medical Devices
BMI Industry View: Greece has the fifth largest medical device market in Central and Eastern Europe but growth has been constrained by the economic crisis. The market is heavily reliant on imports, which contracted considerably between 2009 and 2012. The current heightened economic and political uncertainty is unlikely to improve investment in healthcare in the short term. Domestic manufacturers are mainly small scale operations focusing on low value, high volume...
Oil & Gas
Greece Oil & Gas
BMI View: We have a negative outlook for the Greek upstream sector as the nebulous fiscal and regulatory environment at a time of low oil prices will dent industry interest in the licensing round due in July 2015. Greece's importance in the regional oil and gas sector lies in the scale of its downstream and we forecast exports of fuels to grow in 2015 as the domestic market contracts for another year. Domestically, jet fuels consumption will experience the strongest growth according to our forecasts as a result of a booming tourism sector.
Pharmaceuticals & Healthcare
Greece Pharmaceuticals & Healthcare
BMI View: While Greece will, despite significant political brinksmanship linked to members of the ruling party Syriza, reach a deal with its creditors and avoid a Eurozone exit, the political and economic uncertainty of the interim will continue to hamper the modernisation of the health sector and the expansion of pharmaceutical spending and public access to health services. Greece will continue to lose attractiveness as a market for drugmakers as already high and rising operating costs are exacerbated by repayment issues that have led many firms to threatening to cut off the supply of treatments.
Headline Expenditure Projections
Pharmaceuticals: EUR4.96bn (USD6.64bn) in 2014 to EUR4.85bn (USD5.34bn) in 2015 -2.1% in local...
Greece Real Estate
BMI View: With the Greek economy back on track for growth, we expect an improvement of the wider macroeconomic situation to also support a recovery of the commercial real estate market. Although there are several positive indicators especially for the office and retail real estate segments, the economic recovery remains highly fragile and uncertainty continues to dominate the market atmosphere. We therefore expect rental rates to remain largely stable with slight positive trends in the abovementioned two sectors, while the demand for industrial real estate space will remain subdued as the Greek industry continues to struggle.
The commercial real estate sector closely mirrors the general economic trends of the country and as such has suffered significantly in the Greek economic crisis. Hopes are raised as 2014 is expected to be the first year since...
After a decade of impressive growth, the Greek non-hydro renewables industry came to a standstill in 2014, largely on account of regulatory changes introduced under the New Deal in mid-2014, as well as due to persisting economic challenges. While several recent project announcements highlight potential of the industry, we believe Greece's non-hydro renewables expansion will remain anaemic over the coming decade.
Measures to address power regulator LAGIE's deficit (which funds renewable energy) include the New Deal, introduced in April 2014. The measures substantially reduced feed-in tariffs, most steeply for solar photovoltaic (PV) plants; increased the renewables levy charged to all consumers (residential, commercial and industrial); and capped annual installations of new renewables capacity. This is the largest shake-up and restructuring of the Greek renewables sector to date.
In light of these...
BMI View: The outlook for Greek ports and shipping has deteriorated since our last quarterly report, as the government engages in brinkmanship over its debt negotiations and sends confusing signals over the fate of the port privatisation programme. That said, Greek seaports and Piraeus in particular, are to some extent protected by their role as regional gateways, linked to European transit trade demand. We have become more pessimistic over throughput at Piraeus, but we still see positive growth both there and at Thessaloniki.
Since our last quarterly report the economic outlook for Greece has darkened. We have lowered our prediction for GDP growth in 2015 to 0.5% (down from 1.2% previously), which implies that the country's recovery (0.8% growth in 2014 after six years of recession) is beginning to waver. The problem, we believe, is that the new left-wing Syriza...
BMI View : We continue to hold a largely bearish view towards the Greek telecoms sector as a whole, with healthy returns on investment precluded by its challenging economic climate. This is most reflected in the mobile market, which is highly saturated, recording growth of just 0.2% over the course of 2014. Other concerning trends point to the shift away from postpaid to lower value prepaid subscriptions, meaning consumers are spending less. The three major operators have all launched 4G services as of March 2015, but in this environment the outlook is less than optimal. Convergence remains the trend in the wireline sector with Vodafone looking to acquire Forthnet ...
BMI View: We believe that short term prospects in the Greek tourism sector are likely to be adversely effected by the combative stance being taken by the Greek Government in its dealings with the eurozone and the terms of the bailout for the Greek economy. Ultimately if this leads to a Greek exit from the Euro, if not the EU, the country would be likely to return to the Drachma, hugely devalued against the Euro. After the inevitable fallout from such a move, Greece's attraction as a low cost holiday destination could materially benefit the tourism sector, to which the government would look to lead any economic recovery.
At the time of writing (early May 2015), there are growing concerns that negotiations between the Greek Government and the EU/ IMF over the terms of its economic bailout are reaching an impasse with a very real possibility that Greece will default...