Trade with Greece
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ever small– liquidity breath. Moreover, the
improvement of the country’s competitiveness
and international position, the anticipated growth
of tourism and the imminent resumption of work
on many major products (mainly motorways), can
act as parachutes that will slow down the free fall
of the Greek economy.
This effort to start afresh faces many obstacles,
including market sentiment, which remains rather
negative; the new reduction of salaries, pensions
and disposable incomes either through direct cuts
or indirectly, through taxation; and, of course,
unemployment, which is the greatest problem of
both the Greek society and economy.
On top of that, the accumulated debts of thou-
sands of small and medium-sized enterprises to
social security funds disqualify them from any
development programmes that may be imple-
mented in 2013. Thus, in order to avoid turning
this assistance into a useless gift, it is absolutely
necessary to implement the ACCI’s proposal to
capitalize these debts and ensure their repay-
ment in small instalments by 2020. This will not
only help businesses obtain financing, but will
also boost the funds’ revenues.
The Bank of Greece also expresses cautious
optimism, noting in its 2012 interim report on
monetary policy that the “positive developments”
in the last two-months of 2012 “raise reasonable
expectations that the Greek economy could
recover sooner that currently anticipated”.
Nonetheless, “the consistent implementation of
the new legislation, along with measures
designed to speed up recovery and a wider struc-
tural reform programme, are essential to making
this happen. Any delay, though, will push back
recovery, and this time the consequences will be
much graver”.
The BoG believes that “the worst is behind us”,
estimating that “the recession peaked in 2011,
when the GDP shrank by 7.1%”. In 2012 the GDP
contraction rate will be reduced by one percent-
age point, standing slightly above 6%, while in
2013 it will further fall to 4%-4.5% and “recovery
will begin in 2014”. Therefore, based on the cen-
tral bank’s estimates, the cumulative reduction of
Greece’s GDP from 2008 to 2012 amounts to
20%, and may approach 24% in the six-year peri-
od 2008-2013.
On its part, the International Monetary Fund (IMF),
despite noting that Greece’s “fiscal position contin-
ues to improve”, speaks of an economy that
remains “weak” and plagued by “weaker confi-
dence and tight liquidity conditions, alongside
weakness in export markets”. The IMF forecasts
that recession will stand at approximately 4.25% in
2013, also identifying a financing gap of €5.5-9.5
billion for the period 2015-2016, raising the possi-
bility of further measures amounting to €2-4 billion.
Therefore, it seems that, despite any signs that
the free fall may be slowing down, in 2013 the
Greek economy will contract for a sixth year in a
row, setting a new negative record for the coun-
tries of Europe. In the five-year period that has
just ended, retail trade found itself, without exag-
geration, in the eye of the storm. The sector suf-
fered a severe blow, comparable only to the blow
dealt to the construction industry. It’s losses were
almost two times the GDP contraction rate during
the five-years of the crisis, and are explained by
the fact that retail trade was directly affected by
the reduction of disposable incomes, as well as
the rather negative sentiment that prevailed in the
market, and the complete and violent change in
consumption patterns within a very brief time peri-
od. The collapse of the construction sector, on the
other hand, was due to the discontinuation of
bank financing.
“Despite the recession, the risk of a Greek default will
be further reduced in 2013, while no one can rule out
the possibility of 2013 being a surprisingly good year
for Greece.” The message of the National
Confederation of Hellenic Commerce (NCHC) for the
New Year let out an optimistic tone, a hope that “the
worst is over” and that the market, for the first time
after five years, will see some clear signs of recovery.
By Thanassis Heliodromitis
