‘It is a myth that Greek people don’t work. Greek people work long, hard hours and are, by nature, entrepreneurial.’

I have conducted business in Greece through every phase of the recent economic cycle: the Golden years of the early 1990s, the post-Balkan Wars stage of 1999–2003, the post-Olympic games period from 2004–2009 and the challenging years of 2009–2012. 

I had the honour of advising the Greek government during its European presidency of 2003 on international strategic communications and in 2004 on European structural fund absorption strategies. Then, from 2005–2010, I advised the Hellenic Telecommunications Organisation on its engagement with European institutions (prior to its privatisation under Deutsche Telekom), as well as working on a number of other strategic industry initiatives in the financial services and energy sectors as Greece became the business hub of South-East Europe. Given my work, I was able to dive deeply and gain an understanding of the labour market structure in both the public and the private sectors. 

Illustration by  Costas Mantzalos

Illustration by Costas Mantzalos

It is a myth that Greek people don’t work. Greek people work long, hard hours and are, by nature, entrepreneurial. 

If it weren’t for the private sector retaining jobs, competing internationally through exports and supporting social welfare as the crisis continued, Greece would not have recovered as a regional economy in South-East Europe. The financial crisis has tested the national psyche. In Greece, the economic crisis was due to the collapse of the failing bankrupt state – unlike in other Eurozone countries, where the financial sector was the trigger. The Greek state and the public sector continue to fail, dragging the economy back down.

Greek banks, having been reconfigured – in terms of their capital structure and with stringent oversight by supervisory institutional authorities – can claim to have the most diverse and governance-minded boards of the majority of banks in Europe and the US. 

The crisis has made the Greek people more resilient, more creative and more extrovert in their business orientation.

The following insightful overview of the state of affairs in Greece was written especially for this analysis by George Pagoulatos, Professor of European Politics and Economy at the Athens University of Economics & Business, with extensive experience in advising investors and government on the economy of Greece and the Eurozone:

‘The Greek economy is finally growing, with the Bank of Greece recently projecting 1.6 per cent GDP expansion for 2017. But recovery has been delayed and subdued. Delayed, as the economy was already growing in 2014, when the disastrous political management in the first half of 2015 added two more years of contraction/stagnation. And subdued, as the initial projections of over 2.5 per cent growth in 2017 were subsequently revised downwards, due to the delayed completion of the second review combined with a contractionary fiscal policy mix. The ambivalent stance of the Tsipras government towards private investment (a strong pro-investment rhetoric by the prime minister combined with a poor implementation record by much of his leftist government) has also acted as an impediment. On the favourable side, Greece enjoys a degree of political stability unprecedented throughout the 2010–2015 period – though this is largely the outcome of the fact that the erstwhile demagogic opposition of pre-2015 is now in government.

The private sector has persevered [with] an adverse economic and regulatory environment of heavy taxation and high capital costs. Greece remains excluded from the ECB’s public-sector purchase programme, and the Greek banks are impaired by an extraordinarily high rate of non-performing exposures (currently at 44.6 per cent, though on a declining trajectory). 

Yet there are some clearly encouraging developments. In 2017, three banks managed to return to the markets for the first time since 2014, by issuing covered bonds, and a few dynamic Greek companies tapped the bond market at an interest rate well below 4 per cent.

Recovery in 2017 has been largely driven by exports, tourism and shipping. Industrial production is also growing. At 3 billion euros by September 2017, FDI inflows exceeded the total of 2016, though they remain low by EU standards. Most foreign investment continued to be directed at service sectors (hotels and restaurants, transport, financial intermediation and real estate). The economy requires a massive step up of private investment to make up for the severe contraction of gross fixed capital formation during the crisis years. The gradual easing of capital controls will facilitate a return to normality. 

So, a cautious recovery overall, therefore, which could be strongly accelerated by positive change at the government level.’ 

(25 December 2017)

To conclude, investors looking for long-term yield from Greece’s unique commercially exportable expertise should invest in the following sectors: shipping, energy (renewables and transport), tourism, agro business and lifestyle/wellness. 

Click here for Professor George Pagoulatos’s recent article on the economy of Greece and the Eurozone.