Country Report Greece May 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 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 fall and exports will contract even more sharply.
• The current-account deficit will narrow as weak domestic demand and the fall in the price of oil causes imports to contract in value terms, resulting in a significantly smaller deficit on the trade balance.

Monthly review

• On May 4th-5th, parliament voted against lifting the immunity of a member of parliament, Aristotelis Pavlidis, reducing the likelihood that early elections will be held in June to coincide with the European Parliament elections.
• Greece and Albania signed an agreement delineating the continental shelf and other maritime zones between them in the Ionian Sea.
• The government accepted Eurostat figures published on April 22nd showing that the government deficit for 2008 grew to 5% of GDP.
• Parliament passed legislation on April 7th to implement modest stimulus measures, despite being constrained by a high budget deficit.
• In mid-April the Ministry of Economy and Finance announced that it had concluded its first public-private partnership (PPP) contract, the first of 52projects that have been approved since 2005.
• Bank lending to the private sector continued to slow in the first quarter of 2009, raising questions about the government's ability to achieve its target of credit expansion of at least 10% in 2009.

Source: Country Report

This report covers the following industry codes:
SIC Code: 48;70;15;49;60;10
NAICS Code: 517;72;23;22;52;212