The economy is reaching a “ceiling” – THE STEP –

The government prides itself on the performance of the Greek economy and promotes them with fervor at every opportunity. Economic policy makers are excited about growth rates that are more than double the European average, they defend the investment climate, they talk about waves of public and private, domestic and foreign, investment, about the performance of tourism, about the renaissance trends of industry, they are proud of the reduction of unemployment to levels lower than 10%, for the reduction by three percentage points of the risk of poverty and of course for the slow, albeit recorded, improvement of wages and incomes in general.

However, those who closely monitor the performance of the Greek economy do not hide their concern and concern. The most prominent bankers and economists do not share the government’s optimism, rather they feel clouds gathering over the Greek economy. They feel as if the Greek economy is reaching a “ceiling”, exhausting its limits.

In their private conversations, they acknowledge that Greek growth rates are indeed more than twice the European average, but, as they point out, they move in the low zone of 2%, which neither offers security nor can guarantee the long-term progress the country needs.

Bend marks

In support of the above, they note that there is now a lot of evidence that assures that tourism will not continue to outperform, as in the previous many years. Something that is directly linked to the stagnation of most European economies. A fact that can also be seen in exports, which in the previous two years showed dynamism and health and now show signs of decline and retreat.

The signal is twofold. He states directly that the stagnation of most European economies has a negative effect on the Greek economy and points to a further worsening of the balance of payments, as shown by the latest figures from last August. Needless to say, nothing currently assures that the European economies will regain their lost growth momentum and offer some opportunity for a better course of Greek economic affairs.

The investments

In addition, the same factors underline that despite the improvement in the investment climate, the level of investment remains low, at a great distance from the rest of Europe, where on average investments run at an annual rate of 22%, while in the country of “investors of miracles” barely “catch” 14%. And this when the Mario Draghi in his recent in-depth report he recorded that in order to recover the lost European competitiveness, the rate of annual investments in Geria Epirus will be required to rise to 26%.

The truth is that in addition to the above factors and conditions there are also fiscal risks. Our country, in order to face the Turkish aggression of the previous years, was forced to significantly increase defense spending and close agreements for the supply of warplanes and high-cost ships, the repayment of which will be burdened by the next budgets.

Risks

In an environment of economic hardship, the assumed burden of defense spending is unlikely to require a shift to restrictive policies, with all that this entails for the country’s development prospects.

We still cannot ignore the fact that for the last six years Greece has been enjoying conditions of political stability. The current political conditions do not allow for certainties regarding the maintenance in the future of the good of political stability, which is crucial for economic development. So the risks, economic and political, are ahead and the Greek skies may become cloudy again.

Bankers and entrepreneurs are quick to position themselves against these prospects and claim more dynamic policies on the part of the government.

They point out that the country in this environment of European stagnation must take advantage of the comfortable liquidity conditions that prevail internationally and domestically and adopt a broad program to support investments with the best possible utilization of available financial resources and tools.

It is characteristic that the Association of Greek Industries raises the issue of adopting more investment incentives, tax and other, such as for example the formation of profitability conditions through fast depreciation.

Be that as it may, everyone realizes that the current level of Greek investments is not enough and real leaps and consolidation of a distinct investment climate will be needed in order to overcome concerns and overcome the given Greek weaknesses.

Dystocia

Until recently, the Greek government avoided any criticism of the investment deficit and declared itself satisfied with the investment initiatives, public and private. Last week, however, he made a move in the right direction.

He recognized the distress in Thessaly, affected by the storm “Daniel”, as well as in the nationally sensitive and constantly deteriorating population and economic regions of Western Macedonia and Eastern Macedonia and Thrace and decided to redirect financial resources of the Recovery Fund amounting to 3 billion. euros, which with bank leverage can reach up to 8.5 billion euros. If private investments of 8.5 billion euros are indeed made possible in Thessaly, at the western and eastern ends of Northern Greece, the image and position of the country will really change.

Initiatives

The interesting thing is that interesting investment projects are underway in the periphery of the country, as well as that throughout the country, separate business schemes are active and developing, undertaking new initiatives. His METLEN Evangelos Mytilinaios is preparing an investment of 350 million euros in Northern Greece in the zone of rare earths and raw materials, taking advantage of the needs of the European market in gallium, a rare and critical metal for the production of semiconductors, which can be produced from the processing of bauxite by-products. Greece has also in recent years developed into a unique pharmaceutical production base for the whole of Europe and together it can be proud of its sophisticated cables, its innovative pipework, its modern batteries, its automated energy systems.

The food industry also and more broadly the agri-food sector have to demonstrate distinct import substitution efforts. And even the recent announcements of widespread development of greenhouses across the territory may provide interesting answers.

The opportunity

As the managing director of Eurobank is wont to say Fokion Karavia, “comfortable liquidity conditions allow investment leaps that the country and its economy need”. And he doesn’t hide that “strong international investment schemes that have a presence in Greece, recognizing the competitive conditions offered by the Greek banking system, claim from here financial resources for their jobs in European countries”. In general, the opportunity is now and the government must be bold if it really wants to shape a new production model, changing the country’s course and its prospects.