Country Report Greece April 2009

Outlook for 2009-10

• The Economist Intelligence Unit's central forecast is that an early election will be held before the end of the parliamentary term in 2011, potentially in March 2010, when a new president must be elected.
• If an early election is called, the opposition Panhellenic Socialist Movement (Pasok) would be unlikely to secure an absolute majority, implying that an agreement with at least one other party would be needed.
• The banking sector has so far not been as severely affected by the financial crisis as in many other countries, but is still being given state support and further measures could be needed as it is heavily exposed to the Balkans.
• The Ministry of Economy and Finance aims to raise 1bn in privatisation revenue in 2009. The government is seeking strategic investors for the Public Gas Corporation (DEPA) and the Thessaloniki Water and Sewage Company.
• We expect that the general government deficit in 2009-10 will significantly exceed the ceiling of 3% of GDP established by the EU's Stability and Growth Pact (SGP).
• Rising debt-servicing costs, a sharp slowdown in credit growth, high inflation and falling business confidence will cause domestic demand to slow.
• The current-account deficit will narrow as consumer, investment and import growth slow and there is a strong surplus in net transfers and services.

Monthly review

• The government's one-seat absolute majority could be threatened by a criminal investigation involving the former minister of merchant marine and current New Democracy (ND) member of parliament, Aristotelis Pavlidis.
• George Souflias, the minister of the environment, physical planning and public works, announced that a new, separate Ministry of the Environment will be created in the first half of 2010.
• Firebomb attacks against commercial and political targets have continued, with several incidents of property damage, but no injuries so far.
• The economy and finance ministry announced measures designed to cut the general government budget deficit by 1percentage point in 2009.
• The government is seeking to stimulate economic growth in Greece by maximising the drawdown of structural aid funds under the National Strategic Reference Framework (ESPA).
• Growth in bank lending decelerated only moderately from 14.8% in 2007 to 13.9% in 2008, owing to a slowdown in growth of lending to households.

Source: Country Report

This report covers the following industry codes:
SIC Code: 59;60
NAICS Code: 44;52