the past ten years. This loss can be attributed to
four factors: i) the increase of unit labour costs
vis-à-vis Greece’s trading partners; ii) the appre-
ciation of the euro, especially during the first three
years after its introduction; iii) the low structural
competitiveness of the Greek economy, which is
translated into low technology content and low
quality competitiveness of exports; and iv) the
rise of non-tradable goods’ and services’ prices
vis-à-vis tradables.
A 2011 report by Eurobank EFG* noted that:
“International organizations and the Bank of
Greece estimate that during this period [2000-
2009] real appreciation of approximately 20%
was accumulated. ... 70% of this loss in price
competitiveness is due to an increase in wages
and relative prices in sectors of non-tradable
goods and services (public sector, services for
domestic consumption, constructions, etc) in
comparison to wages and prices in sectors which
produce exportable goods and services (industry,
tourism, shipping, etc). ... The remaining 30% (i.e.
approximately 6.5 percentage points of price
competitiveness loss according to official esti-
mates) is due to the increase of prices and wages
in the export sector vis-à-vis the country’s trading
partners. A portion of this loss in price competi-
tiveness is due to the nominal appreciation of the
euro.
”
So, now that we are in the beginning of 2013,
awaiting for the final figures regarding the previ-
ous year, it is estimated that the current account
deficit will fall below 5% of GDP, certainly due to
the drop in imports, and also due to the increase
in exports, without, of course, ignoring the contri-
bution of tourism and shipping. These develop-
ments create a new image for the Greek econo-
my, an economy that is more open, more extro-
vert and more internationalized, while it is expect-
ed that this image will be further enhanced, prov-
ing that this improvement is not an one-off,
chance event.
In the same vein, we are expecting the full
restoration of the Greek economy’s price compet-
itiveness at 1995 levels within 2013, along with
the cumulative reduction of unit labour costs by
30% during the period 2009-2020. As a result of
the drastic reduction of nominal wages in the past
three years, the Greek economy has recovered
almost all the competitiveness it had lost in terms
of labour costs.
Today, the Greek economy is trying to reposition
its brand in international markets, often against
their misgivings, amidst an adverse international
climate and while struggling to cope with a multi-
tude of problems on the domestic front. Exports
may be opening huge markets to Greek products,
but at the same time they are pitting them against
international competition. This means that trad-
able products should not only be appealing to for-
eign customers, but should also be more appeal-
ing than their competitors.
Despite what is being said –admittedly less and
less– Greek exports have great potential and
prospects for further growth. For example, our
country’s primary sector is in front of a systemic
opportunity, which has to be fully utilized. This
opportunity stems from the continual increase in
global demand for food, and the resulting
increase in food prices. There is no doubt that
these trends reflect demographic, climatic and
geopolitical developments of global magnitude,
which are, obviously, taken into account for plan-
ning purposes, on both the national and the busi-
ness level. It should also be noted that there has
been a change in consumer habits in favour of
Trade with Greece
71
*“Competitiveness, External Deficit and External Debt of the Greek Economy”,
Economy & Markets
, Eurobank EFG,
Volume VI, Issue 7, April 2011.
