Market Research Logo

Greece Country Risk Report Q2 2016

Greece Country Risk Report Q2 2016

Core Views A return to marginal positive real GDP growth rates in 2016 will be followed by years of sluggish growth. A slight improvement in 2016 will mainly be driven by the removal of capital controls and a slight uptick in consumer confidence. These growth rates will be insufficient to help Greek households and firms recover from the huge destruction of wealth the country has endured during its depression. One of the few bright spots for Greece is its current account, which is likely to remain in surplus over the coming years, having been at a deficit of over 10% of GDP only a few years ago. Consumer price index (CPI) growth will remain in positive territory, due to a slight recovery in domestic demand, the ongoing impact of VAT hikes, and supply-side issues for the food sector. The ruling Syriza administration will struggle to maintain popular support while implementing strict bailout fiscal consolidation plans and the number of migrants likely to arrive again in Greece in 2016. Major Forecast Changes We have revised up our estimate for 2015 real GDP growth to -0.3% in 2015, from -1.6% previously. This is due to the fact that coincident and lagging indicators showed the impact of political uncertainty and the imposition of capital controls were not as severe as we had previously expected.


Executive Summary
Core Views
Major Forecast Changes
Key Risks
Chapter 1: Economic Outlook
SWOT Analysis
BMI Economic Risk Index
Economic Growth Outlook
Economy Healthcheck: Hard To See Any Sustainable Growth Drivers
Economic activity will remain well below the level needed for Greece to return to anywhere close to its potential output. A lack of
sustainable growth drivers, fiscal deficit reduction and rising political risk will keep Greece anchored to a painfully sluggish economic
growth trajectory over the coming years.
TABLE: BMI ECONOMIC DASHBOARD
GDP By Expenditure Outlook
TABLE: GDP GROWTH FORECASTS
TABLE: PRIVATE CONSUMPTION FORECASTS
TABLE: GOVERNMENT CONSUMPTION FORECASTS
TABLE: FIXED INVESTMENT FORECASTS
TABLE: NET EXPORTS FORECASTS
External Trade And Investment Outlook
Surpluses Good For Stability
Greece will run current account surpluses in the coming years. This is net positive from a macroeconomic and financial market stability
perspective, by reducing the risk posed by any potential capital flight.
Outlook On External Position
TABLE: CAPITAL & FINANCIAL ACCOUNT BALANCE
TABLE: TOP FIVE GOODS EXPORTS AND DESTINATIONS IN 2014
TABLE: TOP FIVE GOODS IMPORTS AND SOURCES 2014
Monetary Policy
Inflation Here To Stay, Just
Inflationary pressures will build gradually in the coming months, but cheap oil and subdued domestic demand will ensure price growth
remains well below the ECB's loose 2.0% target.
Chapter 2: 10-Year Forecast
The Greek Economy To 2025
Another Lost Decade Ahead
Greece's economy will remain along a painfully sluggish growth trajectory over the next decade. An unsustainable debt load, harsh
fiscal austerity conditions, and dire demographics will conspire to prevent the country returning to anywhere close to pre-financial crisis
levels in real GDP terms.
TABLE: LONG-TERM MACROECONOMIC FORECASTS
Chapter 3: Political Outlook
SWOT Analysis
BMI Political Risk Index
Domestic Politics
Syriza Facing Growing Challenges
Support for the ruling Syriza-led coalition will decline in 2016, as the government implements painful bailout conditions and struggles to
cope with migrant arrivals, and as disaffected voters return to New Democracy.
TABLE: POLITICAL OVERVIEW
Regional Politics
EU-Greece Tensions Another Blow To Schengen Zone
There are no signs that the migrant crisis is nearing an end, and the pressure this is placing on the passportless Schengen zone
continues to rise. The chances of the Schengen agreement remaining in place in its current guise are shrinking by the day, and the
extension of border checks within the zone for two years would require significant reforms if the zone is to remain in existence beyond
that timeframe.
Long-Term Political Outlook
A Decade Of Austerity And Instability
Greece's political landscape is likely to remain tumultuous over the coming years. The legacy of fiscal profligacy and economic
distortions will leave an indelible mark on the Greek economy and society, with political voices becoming even more fragmented. We
therefore expect a prolonged bout of austerity and instability in the decade ahead.
Chapter 4: Operational Risk
SWOT Analysis
Operational Risk Index
Operational Risk
TABLE: DEVELOPED STATES – LABOUR MARKET RISK
TABLE: DEVELOPED STATES – LOGISTICS RISK
TABLE: DEVELOPED STATES – CRIME AND SECURITY RISK
TABLE: DEVELOPED STATES – TRADE AND INVESTMENT RISK
Chapter 5: BMI Global Macro Outlook
Global Macro Outlook
Tail Risks Mounting Amid Sub-Par Growth
TABLE: GLOBAL ASSUMPTIONS
TABLE: DEVELOPED STATES, REAL GDP GROWTH, %
TABLE: BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, 2015 AND 2016 (%)
TABLE: EMERGING MARKETS, REAL GDP GROWTH, %
TABLE: MACROECONOMIC DATA & FORECASTS

Download our eBook: How to Succeed Using Market Research

Learn how to effectively navigate the market research process to help guide your organization on the journey to success.

Download eBook

Share this report