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Mar 1, 2018 - Capacity utilization in the Greek industry in H2:2017 exceeded its long-term average and, in conjunction w
GREECE Macro Flash

NATIONAL BANK OF GREECE | Greece: Macro Flash

GDP Q4:2017

NATIONAL BANK OF GREECE

Aikaterini Gouveli MSc

Consumption

Net Exports

Investment

Inventories

Other expenditure

Growth

2017:Q4

86 Eolou Str., 102 32 Athens, Greece

2017:Q3

NBG | Economic Analysis Department Greece Macro Analysis Team

contributions in pps

2017:Q2

(+30210) 334 1198 e-mail: [email protected]

5 4 3 2 1 0 -1 -2 -3 -4 -5

2017:Q1

Eleni Balikou MSc

GDP growth decomposition by expenditure component

2014:Q3

(+30210) 334 2359 e-mail: [email protected]

2016:Q4

(+30210) 334 1620 e-mail: [email protected]

2016:Q3

Effrosyni Alevizopoulou PhD

2016:Q2

Head of Greece Macro Analysis (+30210) 334 1516 e-mail: [email protected]

2016:Q1

Nikos S. Magginas PhD

2015:Q4

Overview of latest macroeconomic trends in pages 5-13

2015:Q3

activity

2015:Q2

increased business

2015:Q1

momentum, buoyed by

2014:Q4

Greece’s recovery gains

 GDP increased by 1.9% y-o-y in Q4:2017 and by 1.3% y-o-y in FY:2017, the strongest performance in 10 years, despite tighterthan-initially-expected fiscal conditions.  Gross fixed capital formation rebounded impressively in Q4:2017 (+28.9% y-o-y), contributing 3.3 pps to annual GDP growth in this quarter on the back of buoyant non-residential investment (+31.4% y-o-y, the strongest rise in 11 years), which increased its share in GDP to an 8-year high of 14.0%.  The net contribution of investment in GDP growth in Q4:2017 is still sizeable (1.7 pps), even after subtracting the impact from higher imports of capital goods (mainly transportation equipment) and other inputs related to investment. On an annual basis, investment, along with inventory accumulation, contributed 0.7 pps to FY:2017 growth (c. 50% of total output growth adjusted for their corresponding import content).  Increasing business profitability, higher levels of capacity utilization and an effective acceleration in public investment activity – mainly due to a shift of funding from 2017 – are expected to support average annual growth in total investment of 10.8% y-o-y in FY:2018.  On the other hand, consumer spending decelerated over the course of 2017, declining by 1.0% y-o-y in Q4:2017 and remained flat in FY:2017, for a second consecutive year, reflecting still significant fiscal pressure and a negative impact on disposable income from positive CPI inflation, which offset positive labor market trends.  According to NBG estimates, average GDP growth in FY:2018 is estimated in the vicinity of 2.0% y-o-y, of which 0.5 pps corresponds to a positive carry from FY:2017.

NATIONAL BANK OF GREECE | Greece: Macro Flash

Greece’s recovery is continuing, with GDP increasing by 1.9% y-o-y in Q4:2017 _______________________________________________

Greece’s economy continues to gain momentum, buoyed by increased business activity that compensates for subdued private consumption

GDP growth: y-o-y and q-o-q 6

q-o-q

y-o-y

2

3

0

0

in Q4:2017. Output expanded for a fourth consecutive quarter (+0.1% on a seasonally-adjusted quarterly basis). In FY:2017, GDP

-3

-2

-6

-9

despite tighter-than-initially-expected fiscal conditions reflected in

-6

the estimated fiscal tightening of 0.3% of GDP in FY:2017 (an estimated improvement in the General government primary surplus, adjusted for one-offs, from 2.3% of GDP in 2016 to 2.6% of

GDP (q-o-q, s.a., right axis) GDP growth (y-o-y, s.a., left axis)

Greece’s gross fixed capital formation rebounded impressively in Q4:2017, bringing the share of nonresidential investment to GDP to an 8-year high of 14.0% _______________________________________________

Total investment excl. residential construction y-o-y

% GDP

increased by 1.3% y-o-y, the strongest performance in 10 years,

-4

2017:Q4

2017:Q1

2016:Q2

2015:Q3

2014:Q4

2014:Q1

2013:Q2

2012:Q3

2011:Q4

2011:Q1

2010:Q2

-12

28

Greece’s recovery is continuing, with GDP increasing by 1.9% y-o-y

GDP in 2017). The analysis that follows indicates that a key growth driver is business activity, combined with higher investment spending, while consumer spending remains relatively weak. Indeed, gross fixed capital formation rebounded impressively in Q4:2017 (+28.9% y-o-y), contributing 3.3 pps to annual GDP growth

40 20

in this quarter, following a temporary slowing in Q2 and Q3:2017.

16

0

Importantly, non-residential investment was the main source of

12

-20

investment (+31.4% y-o-y, the strongest rise in 11 years), bringing

24 20

8 -40

4

-60

Q2:2000 Q3:2001 Q4:2002 Q1:2004 Q2:2005 Q3:2006 Q4:2007 Q1:2009 Q2:2010 Q3:2011 Q4:2012 Q1:2014 Q2:2015 Q3:2016 Q4:2017

0

the share of non-residential investment to GDP to an 8-year high of 14.0%. The net contribution of investment in Q4 GDP growth is still

Total investment excl. residential construction (%GDP, left axis) Total investment excl. residential construction (y-o-y, right axis)

sizeable (1.7 pps), even after subtracting the impact from higher imports of capital goods and other inputs related to investment. On

The acceleration in public investment activity in Q4:2017 is estimated to have added about 0.3 pps in GDP growth on an annualized basis

an annual basis, investment, along with inventory accumulation,

_______________________________________________

appears that spending on new transportation equipment has been

GFCF & PIP disbursements as % of quarterly GDP

the dominant driver of investment growth in both Q4:2017 and

20

% GDP

% GDP

10

contributed 0.7 pps to FY:2017 growth (c. 50% of total output growth adjusted for their corresponding import content). Indeed, it

FY:2017. The acceleration in public investment activity in Q4:2017

8

16

6

is estimated to have added about 0.3 pps in GDP growth on an

14

4

annualized basis.

12

2

10

0

Q2:2010 Q4:2010 Q2:2011 Q4:2011 Q2:2012 Q4:2012 Q2:2013 Q4:2013 Q2:2014 Q4:2014 Q2:2015 Q4:2015 Q2:2016 Q4:2016 Q2:2017 Q4:2017

18

In this vein, it is encouraging that business activity showed further signs of sustainable improvement in Q4:2017. Indeed, gross

PIP Disbursements (% GDP, right axis) GFCF (% GDP, left axis)

GREECE | NBG Macro Flash |March 2018| p. 2

NATIONAL BANK OF GREECE | Greece: Macro Flash

operating surplus and mixed income created by the corporate

Spending on new transportation equipment has been the dominant driver of investment growth in both Q4:2017 and FY:2017

sector – a good proxy for their profitability and thus, of their

_______________________________________________

Q4:2017 and by 1.6% y-o-y, on average, in FY:2017, recording the

Contribution in annual change in GFCF by investment component 30

30

contribution in pps

20

20

10

10

0

0

Q4:2017

Q2:2017

Q4:2016

Q2:2016

Q4:2015

Q2:2015

-20

Q4:2014

-20

Q2:2014

-10

Q4:2013

-10

Q2:2013

willingness and capacity to invest – increased by 2.0% y-o-y in

first annual expansion since 2008. Moreover, the level of capacity utilization has increased to levels which in Q4:2017 exceeded the long-term average in specific, more competitive, industrial subsectors, while residential construction is also expected to bottom, as indicated by an average increase in residential building

Other investment (in pps) Transport equipment (in pps) Machinery & technology equipment (in pps) Residential construction (in pps) Non-residential construction (in pps) GFCF (y-o-y)

Capacity utilization in the Greek industry in H2:2017 exceeded its long-term average and, in conjunction with a new improvement in business conditions in Q1:2018, presages a further increase in investment in 2018

permits issuance (17.7% y-o-y in 11M:2017). Finally, public investment spending is also expected to increase by 26.9% y-o-y in FY:2018 on a cash basis (mainly due to a shift of EU funding and related payments from 2017). In line with these positive trends, total gross fixed capital formation is expected to grow by a healthy 10.8% y-o-y in 2018, according to NBG estimates.

_______________________________________________

On the other hand, consumer spending remains weak, decelerating

PMI & Capacity utilization

over the course of 2017, declining by 1.0% y-o-y in Q4:2017 and by

11

%

Index

6

72

-0.4% s.a. q-o-q -- following declines of -0.5% q-o-q and -0.2%

70

1

68

-4

66 64 62

-19

60

-24

58

May-13 Aug-13 Nov-13 Feb-14 May-14 Aug-14 Nov-14 Feb-15 May-15 Aug-15 Nov-15 Feb-16 May-16 Aug-16 Nov-16 Feb-17 May-17 Aug-17 Nov-17 Feb-18

-9 -14

q-o-q, respectively,

in Q3 and Q2:2017. In FY:2017, private

consumption remained flat, for a second consecutive year, reflecting still significant fiscal pressure (personal taxes and social security contributions increased by an estimated 0.2% of GDP in FY:2017 compared with 2016). Moreover, the return of consumer price inflation to positive territory (1.1% y-o-y in 2017), following 4

PMI, deviat. from 50 (left axis) Capacity utilization (right axis)

Business activity showed further signs of sustainable improvement in Q4:2017

years of deflation, took an additional toll on household disposable income. This offset the supportive impact of higher employment

_______________________________________________

(2.2% y-o-y on average in 11M:2017). This trend suggests that the

Gross value added by sector of economic activity

financial position of Greek households is still fragile. Sluggish private

2

2

1

1

0

0

-1

-1

-3

Q4:2017

Q3:2017

Q2:2017

Q1:2017

Q4:2016

Q3:2016

Q2:2016

Q1:2016

y-o-y

Q4:2015

Q3:2015

Q2:2015

-3

-2

contributions in pps

Q1:2015

-2

Industrial (left axis) Construction (left axis) Household services (left axis) Accommodation, trade, transportation (left axis) Other sectors (left axis) Total value added (y-o-y, right axis)

consumption is expected to continue in 2018, in view of the continuing fiscal effort needed to achieve the 3.5% primary surplus target, combined with subdued wage trends in the face of still high unemployment. In fact, the effective increase in fiscal pressure is relatively higher for medium-income earners, who typically play a central role in the consumption recovery process.

GREECE | NBG Macro Flash |March 2018| p. 3

NATIONAL BANK OF GREECE | Greece: Macro Flash Increasing business profitability will support investment decisions in 2018 _______________________________________________

Net exports subtracted 0.4 pps from GDP growth in FY:2017 (and 0.0 pps in Q4:2017), despite the solid performance of the tourism

GFCF & gross operating surplus 12

30

sector and healthy growth in goods exports, as the annual growth

8

20

in imports of goods and services outpaced that of exports (7.5%

4

10

0

0

-4

-10

-8

-20 y-o-y

y-o-y

-30 2000:Q2 2001:Q3 2002:Q4 2004:Q1 2005:Q2 2006:Q3 2007:Q4 2009:Q1 2010:Q2 2011:Q3 2012:Q4 2014:Q1 2015:Q2 2016:Q3 2017:Q4

-12

A further strengthening in economic sentiment and sustainable employment growth point to an acceleration in GDP growth in 2018 _______________________________________________

Employment, GDP growth & economic sentiment y-o-y

92

-3 82

-6 -9

-15

projection mainly reflects the increase in economic sentiment and manufacturing PMI indices, to 3½ and 17½ year highs, respectively, in February 2018. In addition, favorable prospects for tourism activity, reflected by a double-digit increase in early bookings for

effort and higher import spending that typically accompanies the recovery process. Employment growth should continue at the current pace of c. 2.0% y-o-y, reducing unemployment to below

72 *Q4:2017: OctoberNovember 2017 data

20%, on average, in 2018. The above factors are estimated to bring 62

2011:Q3 2012:Q1 2012:Q3 2013:Q1 2013:Q3 2014:Q1 2014:Q3 2015:Q1 2015:Q3 2016:Q1 2016:Q3 2017:Q1 2017:Q3 2018:2Μ

-12

acceleration in GDP growth to c. 2.0% y-o-y in Q1:2018. This

expected to offset the drag on growth from the additional fiscal 102

0

activity, incorporating the latest information from monthly

2018, along with favorable growth trends in the euro area, are

Index

3

NBG Economic Analysis’ “high frequency indicator” of economic

macroeconomic data releases for early 2018, points to an

Gross fixed capital formation (2q m.a., right axis) Gross oper. surplus & mix. income (2q m.a.,left axis)

6

y-o-y and 6.9% y-o-y, respectively, in constant price terms).

Employment growth, y-o-y (left axis)* GDP growth, y-o-y (left axis) EC Economic sentiment indicator (right axis)

GDP growth in FY:2018 in the vicinity of 2.0 % y-o-y, of which 0.5 pps corresponds to a positive carry from FY:2017.

GREECE | NBG Macro Flash |March 2018| p. 4

NATIONAL BANK OF GREECE | Greece: Macro Flash

GREECE Macro View - Economic Outlook | March 2018

Greece’s recovery on track, supported by investment activity, policy credibility improves and financial markets assign an increasing probability of a successful completion of the 3rd economic adjustment programme

GREECE | NBG Macro Flash |March 2018| p. 5

NATIONAL BANK OF GREECE | Greece: Macro Flash

Jan-18

Feb-18

Dec-17

Oct-17

Nov-17

Sep-17

Jul-17

Aug-17

Jun-17

Apr-17

May-17

Mar-17

Jan-17

Feb-17

Dec-16

Oct-16

Nov-16

Sep-16

Jul-16

Aug-16

Jun-16

Apr-16

May-16

Mar-16

Jan-16

Feb-16

Dec-15

Oct-15

Nov-15

Sep-15

Aug-15

Greece: Tracking the economy’s cyclical position

PMI (index level)

39,1 43,3 47,3 48,1 50,2 50,0 48,4 49,0 49,7 48,4 50,4 48,7 50,4 49,2 48,6 48,3 49,3 46,6 47,7 46,7 48,2 49,6 50,5 50,5 52,2 52,8 52,1 52,2 53,1 55,2 56,1

Industrial confidence (index level)

-30,2 -23,3 -19,6 -16,6 -13,6 -10,1 -10,2 -7,8 -7,8 -11,6 -9,1 -7,3 -5,1 -6,2 -4,7 -7,8 -5,7 -5,0 -5,1 -6,7 -5,6 -10,4 -7,3 -2,7 -3,7 -0,7 -4,7 -3,9 0,2

Manufacturing production (yoy)

3,7

2,7 -1,0 2,2

5,3

5,0

1,1 -1,7 7,2

7,2

8,9 10,8 3,2

Industrial production (yoy)

4,2

3,0 -1,7 2,6

6,9

4,1 -2,9 -3,6 3,7

3,5

8,1

Services confidence (index level)

-42,8 -15,1 -14,3 -15,4 -16,6 -5,3 -23,1 -17,3 -13,0 -11,4 -17,5 -8,3 -4,0 -6,9 1,3

Consumer confidence (index level)

-64,8 -64,2 -59,6 -64,1 -61,1 -63,9 -66,8 -71,9 -73,7 -71,9 -68,0 -69,2 -70,1 -65,9 -63,6 -66,9 -64,4 -67,8 -73,3 -74,4 -72,2 -69,7 -68,8 -61,5 -57,0 -53,7 -54,0 -53,8 -50,3 -51,0 -53,0

Retail confidence (index level)

-31,0 -20,0 -15,3 -12,8 -5,3 -3,4 3,2

Retail trade volume (yoy)

-2,1 -3,3 -2,4 -4,4 0,2 -1,7 -6,8 -1,2 -2,0 -6,3 -3,6 9,5 -2,1 2,4

Construction Permits (yoy)

-28,5 -13,1 -38,2 -4,5 67,3 -5,2 8,3 -34,7 -27,3 -39,8 -26,1 38,3 64,4 18,7 5,7

House prices (yoy, quarterly series)

-6,0 -6,0 -5,1 -5,1 -5,1 -4,4 -4,4 -4,4 -2,5 -2,5 -2,5 -1,5 -1,5 -1,5 -1,0 -1,0 -1,0 -1,9 -1,9 -1,9 -1,2 -1,2 -1,2 -0,6 -0,6 -0,6 -0,3 -0,3 -0,3

Construction confidence (index level)

-67,5 -52,8 -49,4 -47,0 -49,1 -37,9 -37,5 -35,9 -45,9 -39,0 -39,8 -55,6 -52,5 -59,5 -67,1 -53,8 -44,0 -45,3 -59,7 -49,8 -53,5 -67,4 -55,6 -39,7 -49,2 -36,9 -44,7 -59,3 -58,3 -50,4 -45,1

Employment (y-o-y)

2,3

2,2

2,7

2,7

3,1

2,7

3,1

3,3

3,0

2,2

2,1

2,3

1,8

1,8

1,0

0,8

0,0

0,6

1,7

2,0

2,1

2,6

2,4

2,0

2,7

2,4

2,6

2,6

Interest rate on new private sector loans (CPI deflated)

6,3

6,5

6,0

5,7

5,3

5,7

5,4

6,2

6,1

5,7

5,6

6,1

5,9

5,7

5,5

5,7

4,8

3,7

3,2

2,7

3,1

3,6

3,5

3,7

3,9

3,7

4,1

3,6

Credit to private sector (y-o-y)

-3,7 -3,6 -3,6 -3,7 -3,6 -5,0 -4,8 -5,1 -4,6 -3,2 -3,1 -2,6 -2,7 -2,7 -2,8 -2,5 -4,5 -4,7 -4,5 -4,7 -4,4 -4,7 -5,6 -6,1 -6,4 -6,3 -6,4 -7,3 -5,7 -5,8

Deposits of domestic private sector (y-o-y)

-27,0 -26,6 -26,9 -27,1 -23,5 -17,5 -13,4 -12,0 -9,0 -6,1 0,5

1,7

2,4

1,6

3,0

3,4

3,4

4,7

4,9

Interest rate on new time deposits (households, CPI deflated)

2,7

1,9

1,8

1,8

1,2

1,6

0,7 -0,5 -0,6 -1,1 -1,0 -0,5 -0,4 -0,4 -0,3 -0,4 -0,1 -0,5 0,0

0,8

Economic sentiment index (EU Commision, Euro area)

104 105 106 105 106 105 103 102 103 104 104 104 103 104 106 106 107 108 108 108 109 109 111 111 111 113 114 114 115 115 114

Exports (other (excl.oil&shipping) y-o-y 6m mov.avg

7,8

Imports (other (excl.oil&shipping) y-o-y 6m mov.avg

-0,9 -5,2 -6,5 -8,1 -10,0 -6,7 -4,1 -2,8 -1,9 -1,5 -0,9 4,1

2,9

5,0

2,0

2,2

1,7

1,2

1,7

1,4

3,0

5,6

2,4

2,1

5,1

1,7

4,7

1,6

5,5

1,9

7,3

0,5 -0,2 6,9

8,2

1,3 -1,8 0,9 2,1

2,5

6,4 10,2 -0,3 5,3

7,1 11,0 10,1 0,8

3,5 -3,1 -3,2 1,9

9,3 15,0 10,7 10,9 9,8 12,9 1,9 2,6

1,3 -0,6 -1,9 -1,0 -0,6 -0,1 -0,3 -2,0 -1,4 -1,2 0,5 6,8

8,8

6,6

2,7

6,3

3,0

1,8

2,9

2,3 -0,1 1,8

6,3

1,8

2,1

5,5

3,2

0,2

0,7

2,0

1,2

4,2

8,9 11,5 9,0 17,4 22,9 15,3 14,4 13,6 13,4 8,9 18,9

3,0

4,0 -1,0 -0,1 9,9 -1,2 2,1

1,5 -3,4 -1,3 -3,6 0,0 0,3

3,7

2,5

2,0

2,3 -0,4 1,8

2,8

0,8 -0,8 -1,0 -2,6 1,8

9,4 -25,9 -14,1 -0,1 71,0 22,1 52,7 25,1 10,0 9,5 -4,1 96,7 24,4

5,2

3,1

2,9

3,1

3,1

3,4

3,4

4,3

4,3

4,6

4,6

4,8

4,3

0,9

4,1

6,5

5,8

6,4

6,1

7,5 10,0 9,6 11,3 9,4 11,8 9,6

9,0

7,9

8,8 10,0 7,6

3,8

4,4

4,6

6,3

9,3

6,4

6,1

7,6

6,3

9,2

9,0

5,2

NBG Composite Index of cyclical conditions ► ► ► ► -49,0 -29,0 -27,0 -31,0 -24,7 -24,9 -25,2 -23,5 -22,6 -22,0 -21,7 -20,3 -18,6 -19,8 -19,6 -21,3 -22,8 -19,3 -21,0 -17,3 -13,2 -10,3 -6,7 -5,0 -1,4 2,5 2,7 2,9 3,2 3,3 Color map scale

1

1

2

3

Rapid contraction

4

5

6

7

8

Moderate contraction

9

10

11

12

Slow contraction

13

14

15

16

Stabilization

17

18

19

20

Slow expansion

21

22

23

24

Moderate expansion

25

26

27

27

Rapid expansion

Sources: NBG, BoG, ELSTAT, EU Commission, IOBE

Greece: Growth Outlook 2016

2015 2016 2017 2018f Q1

GDP (real, % y-o-y, s.a.) GDP (real, % q-o-q, s.a. ) Domestic Demand (y-o-y) Final Consumption (y-o-y)

2017 Q3

2018f

Q2

Q3

Q4

Q1

Q2

Q4

Q1f

2,0 … 2,0 0,7

-0,4 -0,9 -0,6 -0,4 -0,6 1,7 -1,3 -1,8

1,2 0,5 2,5 2,2

-0,9 -0,4 -0,6 -0,5

0,4 0,6 2,4 0,4

1,5 1,4 1,9 1,9 0,7 0,4 0,1 0,6 0,3 2,1 1,9 1,5 0,4 -0,9 -0,3 0,1

-1,4

3,7

0,3

0,9

0,8

Q2f

Q3f

Q4f

-0,3 … -1,0 -0,2

-0,3 … 0,7 -0,4

1,3 … 1,6 -0,1

Private Consumption (y-o-y)

-0,5

0,1

0,1

0,7

Fixed Capital Formation (y-o-y)

-0,3

1,5

9,7

10,8 -9,9 13,3 14,7 -9,0 16,5 1,8 -6,5 28,9 12,3 16,2 18,5 -0,9

-25,7 -12,4 2,3 2,5

-8,7 10,8

1,8 10,9

-16,1 -23,4 -2,9 -9,4 16,7 15,8

-3,1 -10,8 -5,1 -9,4 18,4 2,2

-0,9 0,7 2,9 0,4

0,7 -0,4 6,9 7,5

0,1 -0,1 6,3 6,1

1,7 2,0 -1,1 0,3 -2,7 -1,3 -9,5 -10,3 9,2 -9,5 -1,9 14,0

1,0 0,3 -0,2 -2,0 4,9 5,2 5,2 11,1

Residential construction Total GFCF excluding residential

Inventories* (contribution to GDP) Net exports (contribution to GDP) Exports (y-o-y) Imports (y-o-y)

0,9 -1,0 -1,9 1,2

-2,1

-0,2

-1,0

-7,4 -11,6 -6,4 31,4

-0,3 3,7 -1,1 1,2 -0,7 0,0 9,7 7,6 5,3 4,8 9,5 4,9

-0,1 … …

2,0

2,2

1,8

0,9

0,6

-0,3

2,4 0,3

2,8 0,8

1,4 1,5

0,3

0,9

1,6

… …

… …

0,0 0,3 0,0 0,3 -0,5 -0,6 7,2 6,5 5,5 5,5 7,3 7,0

*also including statistical discrepancies Source: EL.STAT.other and NBG Research Estimates / Source: ELSTAT, NBG estimates

GREECE | NBG Macro Flash |March 2018| p. 6

… …

0,2 0,3 6,2 4,7

NATIONAL BANK OF GREECE | Greece: Macro Flash Greece’s GDP increased by 1.3% y-o-y in 2017, the strongest pace in 10 years, buoyed by higher investment spending and inventory accumulation, which added 1.1 pps and 0.7 pps, respectively, to annual production growth. In Q4:2017, GDP growth accelerated to 1.9% y-o-y, with investment contributing 3.3 pps, offsetting the drag from lower private consumption (-0.7 pps or -1.0% y-o-y)

GDP figures from the production side point to a sustainable rebound in business activity, which brought annual value added growth to a 10-year high of 1.3% y-o-y in FY:2017 (from -1.2% y-o-y in FY:2016), on the back of strong expansion in the manufacturing, accommodation, transportation, retail trade and household services sectors

Composition of output growth by expenditure component

Gross value added by sector of economic activity

2

0

-1

-1

20

40 30

Private consumption (right axis) Investment (left axis) Exports (left axis) Imports (left axis) Public consumption (left axis)

Q4:2017

Q2:2017

Q1:2017

Q4:2016

Q3:2016

Q2:2016

70 Sources: EL.STAT., EU Commission

60

PMI reached a 17½ year high of 56.1 in February 2018, recording the strongest improvement since June 2000, supported by a broad-based improvement in new orders in both domestic and foreign markets. This significant improvement indicates that business activity remains on a steadily upward trend, and is likely to gain further traction in the following months, supported by favorable demand conditions in the euro area 10

45 30 15 0 -15 -30 -45 -60 -75 -90

Jun-13 Oct-13 Feb-14 Jun-14 Oct-14 Feb-15 Jun-15 Oct-15 Feb-16 Jun-16 Oct-16 Feb-17 Jun-17 Oct-17 Feb-18 Industrial Retail Services

80

EC Economic sentiment indicator (right axis)

Greece: main sectoral confidence indicators (ESI components) EC sectoral confidence indicators, index level

90

GDP growth (left axis)

Industrial confidence increased to its highest level since Q4:2007 and services confidence returned to near its Q3:2017 high, on the back of favorable tourism prospects and improving demand conditions in domestic services. Consumer sentiment has picked up since Q4:2017, but continues to reflect a still vulnerable position of Greek households in early 2018

45 30 15 0 -15 -30 -45 -60 -75 -90

100

2005:Q3

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018f

10

110

2018:Q1

50

120

index

2016:Q4

30

y-o-y

2015:Q3

60

12 9 6 3 0 -3 -6 -9 -12 -15

2014:Q2

70

2013:Q1

70,1 68,8 69,468,9 68,468,768,7 67,2 68,6 68,0

2011:Q4

68,2 67,0 65,2 65,8

Consumer Construction

PMI & Industrial Confidence 10

5 0

0

-5

-10

-10

-20 -15 -20

-30 Index

Index

-25

-40

Dec-02 Feb-04 Apr-05 Jun-06 Aug-07 Oct-08 Dec-09 Feb-11 Apr-12 Jun-13 Aug-14 Oct-15 Dec-16 Feb-18

40

Economic sentiment and real GDP growth

80

% GDP

2010:Q3

(constant 2010 prices) % GDP

-3

Economic sentiment increased to a 3½-year high, with all major sectoral components of activity showing a coordinated expansion, which adds to the evidence that the recovery process is gaining pace in early 2018

Greek GDP spending side decomposition 50

Q1:2016

Q1:2015

2017:Q4

2017:Q3

2017:Q2

Inventories* *including other statistical discrepancies

External imbalances have been corrected, fixed capital formation has picked up in 2017, and private consumption recorded a small decline as a percentage of GDP. A recovery in business investment is estimated to be the key determinant of the economic performance in 2018-2020

y-o-y

Industrial (left axis) Construction (left axis) Household services (left axis) Accommodation, trade, transportation (left axis) Other sectors (left axis) Total value added (y-o-y, right axis)

Net Exports

Investment Growth

2017:Q1

2016:Q4

2016:Q3

2016:Q2

2016:Q1

2015:Q4

2015:Q3

2015:Q2

2015:Q1

2014:Q4

2014:Q3

-5

Consumption

-2

contributions in pps

-3

Q4:2015

-3

Q3:2017

-2

Q3:2015

-1

1

0

2009:Q2

1

2

1

2008:Q1

contributions in pps

Q2:2015

3

2006:Q4

5

PMI, deviat. from 50 (left axis) Industrial confidence, Index level (right axis)

GREECE | NBG Macro Flash |March 2018| p. 7

NATIONAL BANK OF GREECE | Greece: Macro Flash

In the second half of 2017, capacity utilization in manufacturing exceeded its 15-year average, with the indicators of activity in the services sector remaining on a steadily upward trend, supported by favorable tourism prospects, boding well for an expansion in business investment in 2018 Services confidence and capacity utilization %

900 800

10

70

700

0 -10

600

65

500

-20 -30

400

60

300

-40

200

100

Q4:2017

Country risk is on a downward trend, benefitting from financial asset valuations and liquidity conditions. This improvement is expected to support investment decisions, offsetting the continuing pressure from the fiscal side. However, the economy remains very sensitive to external shocks, such as the increase in financial market volatility since early-February 2018. Significant progress in cost containment, intensive business restructuring and consolidation have increased the competiveness of a growing number of larger firms Non-financial corporate, Greek Gov. bond yields & FTSE Large Cap Index

3000

ECB's CSPP

Dec-17

Apr-17

Aug-17

Dec-16

Apr-16

Aug-16

Foreign direct investment liabilities

Capacity utilization (right axis)

3500

Dec-15

Services confidence (left axis)

Apr-15

0

Aug-14

Q1:2017

Q2:2016

Q3:2015

Q4:2014

Q1:2014

Q2:2013

Q3:2012

Q4:2011

Q1:2011

55

Q2:2010

-50

Inflows of foreign direct investment + €3.6 bn in mn eur FY:2017

Aug-15

index

20

75

Dec-14

30

New capital formation will also be supported by a pick-up in public investment activity, following a weaker-thanexpected contribution in FY:2017, when PIP payments were 0.5% of GDP lower than the respective Budget 2018 target, mainly due to the delayed disbursement of EU funding. Accelerating inflows of FDI recorded during 2017 are expected to remain supportive of domestic investment spending during 2018

%

Manufacturing production increased by 3.3% in FY:2017 for a fourth consecutive year, with activity in the sub-sectors of basic metals, pharmaceuticals, oil and food products recording the strongest increases of 24.6%, 14.9%, 5.0% and 1.8%, y-o-y, respectively, in the same period. This performance largely reflects increasing export activity, as suggested by external trade statistics and survey data for manufacturing export orders, which strengthened further in late-2017 and in the first months of 2018

8 14 12

Key sectoral contributions in industrial production growth in pps

12

y-o-y

6

9 6

8

2

3

6

0

0

1500

4

-2

-3

1000

2

2500

Aug-15 Oct-15 Dec-15 Feb-16 Apr-16 Jun-16 Aug-16 Oct-16 Dec-16 Feb-17 Apr-17 Jun-17 Aug-17 Oct-17 Dec-17 Feb-18

2000

Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17

4

10

Fabricated metals (in pps, left axis) Oil products (in pps, left axis) Non-metallic minerals (in pps, left axis) Food (in pps, left axis) Pharmaceuticals (in pps, left axis) Basic metals (in pps, left axis) Chemicals (in pps, left axis) Manufacturing production (y-o-y, right axis)

FTSE/ATHEX Large Cap (left axis) 10yr Greek Government bond yield (right axis) Greek non-financial corp. bond yield based on the BoG Composite Index (right axis)

Cement production, non-residential construction & construction confidence index

40 20 0 -20 -40 -60 -80

Q2:2007 Q1:2008 Q4:2008 Q3:2009 Q2:2010 Q1:2011 Q4:2011 Q3:2012 Q2:2013 Q1:2014 Q4:2014 Q3:2015 Q2:2016 Q1:2017 Q4:2017

40 20 0 -20 -40 -60 -80

y-o-y

Non-residential construction (y-o-y, left axis) Cement production (y-o-y, left axis) Construction confidence (index, right axis) *Q3:2017 estimate for cement production

Pressures on house prices eased further in Q4:2017 (-0.3% y-o-y and -1.0% y-o-y in FY:2017), office prices declined by 0.7% y-o-y in H1:2017 (latest available data), and retail space prices showed a small increase (+0.7% y-o-y). However, a slow improvement in households’ financial positions, the still high supply overhang, along with uncertainty related to the market impact of e-auctions and forthcoming adjustment in imputed real estate prices for tax purposes, continue to weigh on the recovery process 5

Residential & commercial real estate prices

y-o-y

5

0

0

-5

-5

-10

-10

-15

-15

-20

-20

H1:2010 H2:2010 H1:2011 H2:2011 H1:2012 H2:2012 H1:2013 H2:2013 H1:2014 H2:2014 H1:2015 H2:2015 H1:2016 H2:2016 H1:2017 H2:2017

Private construction activity shows signs of bottoming out, despite still weak sentiment. In this regard, private building permits issuance accelerated (23.6% y-o-y, in volume terms, in 11M:2017 and 5.7% y-o-y in Q3:2017, with the residential sub-component recording an increase of 17.7% y-o-y in 11M:2017), presaging the first positive contribution of construction in GDP in 2018, for the first time in ten years

House prices (total, y-o-y) Office prices (Athens, y-o-y) Retail prices (Athens, y-o-y)

GREECE | NBG Macro Flash |March 2018| p. 8

NATIONAL BANK OF GREECE | Greece: Macro Flash The tourism sector overperformed optimistic estimates, with revenue increasing by +11.1% y-o-y in FY:2017 (0.8% of GDP or €1.4bn higher than in 2016), exceeding arrivals growth (+9.7% y-o-y in 2017) for the first time since 2013, while available data for early bookings for 2018 show that the favorable momentum is maintained, with demand from major markets showing a double digit increase

Non-oil exports and imports (nominal terms, balance of payments data) increased by 9.6% y-o-y and 8.1% y-o-y, respectively, in FY:2017, reconfirming the high elasticity of import demand to GDP trends and a high import content of Greece’s goods exports and industrial supplies, along with a resilient export recovery

Travel receipts

Goods trade

800

y-o-y

600

(excluding oil and ships)

40 15

30

15

y-o-y

10

10

400

20

200

10

5

5

0

0

0

0 -200

-10

-5

-5

-400

-20

-10

-10

-30

-15

-15

millions

Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17

Dec-13 Apr-14 Aug-14 Dec-14 Apr-15 Aug-15 Dec-15 Apr-16 Aug-16 Dec-16 Apr-17 Aug-17 Dec-17

-600

Travel receipts, change in level (in mn, left axis)

Exports (y-o-y, 12m m.a.)

Travel receipts (y-o-y change, right axis)

Imports (y-o-y, 12m m.a.)

The current account balance recorded a deficit of 0.8% of GDP in FY:2017, slightly less than FY:2016 (-1.1% of GDP). The significant expansion of the surplus in the services balance (1.0% of GDP higher than in FY:2016), which was supported by the increase in tourism revenue (0.6% of GDP higher than in FY:2016) and in the transportation surplus (0.4% of GDP higher than in FY:2016) offset a larger deficit in the non-oil trade balance (0.3% of GDP higher than in FY:2016) and in the oil balance (0.5% of GDP higher than in FY:2016) Balance of Payments

The improvement in the Greek labor market continues unabated, gathering pace in July-November 2017 (increase in employment of 2.5% y-o-y during this period from 1.9% y-o-y in H1:2017) and the unemployment rate declined further to 20.9% in July-November 2017 – its lowest level since 2011. A stabilization in wages and a pick-up in working hours provide some nascent signs of improvement in job quality Employment growth Unemployment rate

(as % GDP)

2016

2017

2018f

10

-1,1 -7,9 10,5 18,4 -1,6 8,8 0,0 -0,3 0,6

-0,8 -8,2 11,3 19,5 -2,1 9,8 0,1 -0,3 0,5

-1,2 -8,7 11,7 20,4 -2,4 10,2 0,1 -0,3 0,5

5

%

y-o-y

25

Capital account

15

0

10

-5

5 Apr-17

Nov-17

Sep-16

Jul-15

Feb-16

Dec-14

Oct-13

May-14

Aug-12

0

Mar-13

-10

Employment growth (left axis)

Source: Bank of Greece & NBG estimates

Unemployment rate (right axis)

Inflation returned to negative territory in January 2018 (-0.2% y-o-y) – following an increase of 1.1% y-o-y in 2017 – mainly due to a stabilization in oil prices and a subdued increase in core inflation (0.3% y-o-y in January 2018) that reflects sustainable cost containment by Greek firms, along with the deflationary impact of the euro appreciation on import costs

Following a cumulative increase of €5.9bn in 2017 – with household deposits increasing by €3.7bn and corporate deposits by €2.2bn – private sector deposits decreased by €1.5bn in January 2018, reflecting an expected partial reversal of a seasonal boost to household deposits from payments related to social transfers by the Greek State (namely the social dividend and refund of the higher-thanjustified healthcare contributions on pensions) Private sector deposits

3

pps

Χιλιάδες

Headline & core inflation 3

20

Jan-12

Non-oil Trade Balance Non-oil Exports Non-oil Imports Oil Balance Services Balance Primary Income Balance Secondary Income Balance

Jun-11

Current Account

4 3

2

1

1

2

0

0

1

-1

-1

0

-2

-2

-1

-3

-2

y-o-y

Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16 Jan-17 May-17 Sep-17 Jan-18

-3

Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18

2

monthly flows in billions

Contribution of fuel in CPI (in pps, left axis)

Non-financial & insurance corporations

CPI inflation (y-o-y change, right axis)

Households

Core inflation (y-o-y change, right axis)

Private sector

GREECE | NBG Macro Flash |March 2018| p. 9

NATIONAL BANK OF GREECE | Greece: Macro Flash

In January 2018, the annual pace of decline in credit to the private sector remained the same as in December 2017 (-0.8% y-o-y), however, significantly slower compared with -1.3% y-o-y in June 2017 and -1.5% y-o-y in December 2016, on the back of an increase in corporate lending (0.6% y-o-y in January 2018 vs. 0.4% y-o-y in December 2017), while credit to households continues to contract (-2.3% y-o-y in January 2018)

The Greek banking system’s financing from the Eurosystem decreased further to €33.7bn in December 2017, from €66.6bn in December 2016, with ELA declining by €22.1bn since December 2016 (-€65.2bn since June 2015) to €21.6bn, partly reflecting improving market access, and a pick-up in deposits

Greek banks' borrowing from the Eurosystem

Bank credit to private sector 1%

y-o-y

0%

-1%

-1%

-2%

-2%

-3%

-3%

-4%

-4%

-5%

-5%

-6%

-6%

25 20 15 10 5 0

ELA (left axis) ECB (left axis) Eurosystem funding (% of total assets, right axis)

Non-financial corporations

Households

The General Government debt-to-GDP ratio is estimated to peak at 181.1% at end-2017 and follow a downward trend from 2018 onwards, declining to 165% by 2020, to 113.5% by 2040 and to 96.4% of GDP in 2060, according to the baseline scenario A of the latest DSA analysis by the ESM. Gross financing needs are projected to reach levels slightly above the sustainability thresholds of 15% and 20% of GDP, respectively, in the medium and longer term. The Eurogroup meeting of 22 January 2018 confirmed the beginning of technical work on the creation of a contingent growth-adjustment mechanism, which will relate to the provision of future debt relief on Greece’s future economic performance, and could be put in place following the successful completion of the 3rd programme

ANFA&SMP: 4,1%

40 35 30 25 20 15 10 5 0

2060

2050

2016

Other loans: 4,6%

2040

ESM: 12,1%

Other bonds: 12,8%

% GDP

% GDP

2030

EFSF: 41,4%

Greece: Sovereign debt & financing needs

2020

400 360 320 280 240 200 160 120 80

2019

Structure of Greek debt holders as of February 2018

2018

The official sector (including SMP/ANFA holdings) holds about 80% of Greek debt or €246bn in February 2018. A pre-emptive build-up of a cash buffer of, at least, €12bn before the 3rd programme completion in August 2018 appears attainable, following the issuance of a 7-year benchmark bond, of €3bn on 8 February 2018 and the continuing fiscal overperformance that led to a cash surplus in the primary budget of General Government of €5.9bn in FY:2017. Moreover, Greece is expected to receive €1.9bn for this purpose, following the successful completion of the 3rd review of the programme, while a further €8.3bn is expected to be made available upon the completion of the last review in April-August 2018

GLF: 16,7%

35 30

Total private sector

IMF: 3,5%

40

% of total assets

capital controls

bn

Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16 Dec-16 Jun-17 Dec-17

Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16 Jan-17 May-17 Sep-17 Jan-18

0%

180 160 140 120 100 80 60 40 20 0

2017

1%

Debt-to-GDP ratio - Scenario A (left axis) Debt-to-GDP ratio - Scenario B (left axis) GFN-to-GDP ratio - Scenario A (right axis) GFN-to-GDP ratio - Scenario B (right axis)

T-bills: 4,7%

Source: ESM, DSA Analysis, January 2018

The successful implementation by the ESM of the “short-term” package of measures to reduce Greece’s public debt servicing costs contributed to a further smoothening of the long-term debt redemption profile and a sustainable lowering of interest costs. The prospective benefit from the full implementation of the above short-term debt relief measures on Greece’s gross public debt is estimated at 25 pps of GDP by 2060. In this context, the implementation of the short-term measures also contributed to an increase in the share of Greek debt at a fixed rate of 48.1% of total debt in December 2017 from 30% in December 2016 Hellenic Republic debt amortization profile as of February 2018 (including the impact of the impementation by the ESM of the 15

"short-term debt measures" package and the Swap on PSI bonds in November 2017)

euro bn

10

5

ANFA&SMP

Other bonds

IMF

GLF

EFSF&ESM

Other loans

2059

2058

2057

2056

2055

2054

2053

2052

2051

2050

2049

2048

2047

2046

2045

2044

2043

2042

2041

2040

2039

2038

2037

2036

2035

2034

2033

2032

2031

2030

2029

2028

2027

2026

2025

2024

2023

2022

2021

2020

2019

2018

0

Total Debt amort. (end-2016)

GREECE | NBG Macro Flash |March 2018| p. 10

NATIONAL BANK OF GREECE | Greece: Macro Flash

Greek Government bond yields declined in January 2018 to the lowest level since 2006, reflecting a boost in confidence from the successful swap of the Greek PSI bonds and a timely completion of the 3rd review of the economic adjustment programme. However, the assessment of Greek risk remains very sensitive to the increase in volatility in international financial markets since mid-February 2018

The credible improvement in Greece’s fiscal position, in conjunction with the still supportive financial and monetary environment in the euro area, suggest that there is further scope for improvement in the relative valuation of Greek sovereign debt. A sustainable recovery of economic activity and a credible operational specification of the “growthadjustment” mechanism for debt-servicing would be the catalysts for a further improvement in Greece’s access to market financing

Greek Government bond yields 6

10y gov. bond yields & sovereign ratings in the Euroarea & the US

6 %

5

5

5,0

4

4,5

3

3

4,0

2

2

1

1

30/10/2017 8/11/2017 17/11/2017 26/11/2017 5/12/2017 14/12/2017 23/12/2017 1/1/2018 10/1/2018 19/1/2018 28/1/2018 6/2/2018 15/2/2018 24/2/2018 5/3/2018

4

2,5

6

3

3

0

0

Aug-10 Feb-11 Aug-11 Feb-12 Aug-12 Feb-13 Aug-13 Feb-14 Aug-14 Feb-15 Aug-15 Feb-16 Aug-16 Feb-17 Aug-17 Feb-18

6

positive

FR

IE SK

7

9

11

13

15

17

AT

BE

DE FI NL

19

21

Moreover, the surplus in the PIP balance was 0.3% of GDP above target, due to accelerating revenue from the EU that exceeded the respective payments by €0.5bn. Government arrears, including tax refund arrears, decreased by €1.6bn in 2017 (to €3.3bn, the lowest level since the statistical recording of this data), which is €0.6bn greater than the funds disbursed by the ESM for this purpose. Government net revenue and primary expenditure 30 28

30

% GDP, 12m m.a.

28

26

26

24

24

22

22

20

20

Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18

12 9

Latest Outlook positive

ES

In January 2018, the Greek State budget recorded a primary surplus of €1.9bn or 1.0% of GDP, 0.6% of GDP higher than the respective target of the 2018 Budget. Total tax revenue exceeded the respective target by €0.2bn (0.1% of GDP), mainly due to higher-than-budgeted revenue from the settlement of tax arrears from previous years, while lower primary expenditure contributed another 0.1% of GDP to the primary surplus.

15

9

Β3

SI

ΙΤ

1,0

Rating scale

index value: 21 corresponds to AAA rating and 0 to selective default status

Moody's

PT

1,5

Greece's Sovereign Ratings

B

US

2,0

5

These ratings are now 5 notches below investment grade for S&P and Fitch, and 6 notches below for Moody’s. All three agencies maintained a positive outlook. The key drivers for the rating decisions were economic and fiscal improvements, alongside improving prospects of further official debt relief.

Fitch

GR: Jan-18

3,0

0,0

Moody’s upgraded Greece's sovereign bond rating by two notches, to “B3” on February 21, 2018, while S&P and Fitch upgraded Greece by one notch to “B” on January 19 and February 16, respectively.

12



3,5

GR: Mar-18

0,5

6m T-bill 2yr Greek Gov.bond 5yr Greek Gov.bond 10yr Greek Gov. bond 7yr Greek Gov.bond

15

Rating scale: from 0 (default) to 21 (highest quality - AAA)

yield, %

S&P B positive

Gov. Net Revenue Gov. Primary Expenditure

GREECE | NBG Macro Flash |March 2018| p. 11

NATIONAL BANK OF GREECE | Greece: Macro Flash

Greece:

Dates to Watch

2018

March 1-2

5

8

12

Euro Working Group meeting

EL.STAT. release: Quarterly National Accounts (Q4:2017)

ECB Governing Council: monetary policy meeting

Eurogroup meeting

13

19

21

22-23

ECOFIN meeting

€137mn IMF repayment due

ECB Governing Council: nonmonetary policy meeting

European Council meeting

April 11

20-22

23

26

ECB Governing Council: non-monetary policy meeting

IMF Spring Meeting & World Bank meetings

EL.STAT. release: General government deficit and debt 2017 – 1st notification

ECB Governing Council: monetary policy meeting

May 2 ECB Governing Council: nonmonetary policy meeting

4 Completion of GR-stress tests

16 ECB Governing Council: nonmonetary policy meeting

24 Eurogroup meeting

25 ECOFIN meeting

June early First submission of the 2018 EU-wide stress test’s results to EBA by EU banks

4 EL.STAT. release: Quarterly National Accounts (Q1:2018) / €148mn IMF repayment due

14

21

ECB Governing Council: Eurogroup monetary meeting policy meeting

22

27

28-29

late

ECOFIN meeting

ECB Governing Council: nonmonetary policy meeting

European Council meeting

Completion of 4th Review

GREECE | NBG Macro Flash |March 2018| p. 12

NATIONAL BANK OF GREECE | Greece: Macro Flash

Greek Economy: Selected Indicators 2015

2016 year aver.

Q1

2017 Q1

Q2

Q3

Q4

year aver.

-0,3

0,4

1,5

1,4

1,9

1,3

Q4:17

1,9

2,0

0,7

2,4

0,3

2,1

1,9

1,6

Q4:17

1,9

2,0

-0,5

-0,4

0,4

0,4

-0,9

-0,3

-0,1

Q4:17

-0,3

0,7

14,7

-9,0

1,5

16,5

1,8

-6,5

28,9

9,7

Q4:17

28,9

10,8

-10,3

9,2

4,9

-1,9

5,2

9,7

7,6

5,3

6,9

Q4:17

5,3

6,3

-1,9

14,0

5,2

1,3

11,1

4,8

9,5

4,9

7,5

Q4:17

4,9

6,1

Q1

Q2

Q3

Q4

Q2

Q3

Q4

GDP

0,0

0,4

-2,4

0,5

-0,3

-0,4

-0,9

1,2

-0,9

Domestic demand

1,2

-1,4

-4,4

0,5

-1,1

-0,6

1,7

2,5

-0,6

Final Consumption

0,5

0,9

-2,1

0,1

-0,2

-1,3

-1,8

2,2

Gross fixed capital formation

5,8

-9,2

-1,8

4,0

-0,3

-9,9

13,3

Exports of goods and services

12,8

11,7

-8,1

-3,6

2,9

-9,5

Imports of goods and services

15,8

4,6

-14,2

-3,4

0,4

-9,5

year aver.

2018f Most recent

Real economy (y-o-y period average, constant prices)

Coincident and leading indicators (period average)

Retail sales volume (y-o-y)

0,0

0,6

-4,2

-2,1

-1,5

-3,3

-4,0

3,1

1,7

-0,6

2,8

2,1

0,9

-0,4

1,3

Dec

1,8



Retail confidence (15-yr. average: -2,8)

-3,0

-1,3

-25,6

-11,1

-10,3

0,9

5,1

10,8

10,5

6,8

5,8

0,4

-1,6

1,3

1,5

Feb

2,8



Car registrations (y-o-y)

19,2

33,2

-2,2

2,1

13,8

-0,3

19,5

16,8

4,0

10,7

37,8

3,4

35,8





Nov

18,9



Consumer confidence (15-yr. average: -51,3)

-37,0

-43,6

-60,6

-61,6

-50,7

-67,5

-71,2

-68,4

-65,0

-68,0

-71,8

-70,2

-57,4

-52,7

-63,0

Feb

-53,0



Industrial production (y-o-y)

3,0

-2,5

1,4

2,5

1,0

-1,0

5,1

2,0

3,8

2,5

9,4

2,9

3,5

1,0

4,1

Dec

0,2



Manufacturing production (y-o-y)

6,7

-0,6

-0,5

2,1

1,8

1,2

7,8

5,3

2,2

4,2

6,0

2,7

2,3

2,6

3,3

Dec

6,3



Capacity Utilization (15-yr. average: 70,7)

67,1

67,0

62,0

65,2

65,3

65,9

66,4

67,5

69,6

67,4

68,2

68,7

71,1

70,1

69,5

Dec

70,5



Industrial confidence (15-yr. average: -9,2)

-9,1

-14,0

-26,6

-16,6

-16,6

-9,4

-9,5

-6,2

-6,1

-7,8

-5,6

-7,8

-2,4

-2,8

-4,6

Feb

4,2



PMI Manufacturing (base=50)

48,5

47,1

37,5

48,5

45,4

49,1

49,5

49,4

48,7

49,2

47,0

49,4

51,8

52,5

50,2

Feb

56,1



Construction permits (y-o-y)

29,2

-5,6

-22,4

5,9

-0,3

-11,9

-30,9

38,1

-9,5

-7,0

16,7

32,0

5,7





Nov

24,4



Construction confidence (15-yr. average: -34,1)

-33,9

-44,8

-60,9

-48,5

-47,0

-37,1

-41,6

-55,9

-55,0

-47,4

-51,6

-58,8

-41,9

-54,1

-51,6

Feb

-45,1



PIP Disbursements (y-o-y)

-40,9

-57,6

-21,0

43,9

-2,8

7,0

18,0

35,8

-14,9

-1,8

-36,9

-24,9

-37,0

15,7

-5,4

Jan

207,4



Stock of finished goods (15-yr. average: 12,6)

13,0

15,0

17,4

15,3

15,2

12,5

11,1

14,9

12,2

12,7

10,7

11,8

12,7

10,3

11,4

Feb

4,2



External sector (period average)

Current account balance (% of GDP)

-1,9

-0,4

3,1

-1,0

-0,2

-1,5

-0,3

2,2

-1,4

-1,1

-1,6

-0,2

2,6

-1,6

-0,8

Dec

-0,8

-1,2

Current account balance (EUR mn)

-3295

-750

5482

-1841

-404

-2560

-608

3822

-2526

-1872

-2783

-427

4575

-2820

-1454

Dec

-1241



Services balance, net (EUR mn)

1297

4757

9062

1816

16932

716

3776

8641

2179

15311

1006

4212

9864

2306

17388

Dec

449



Primary Income Balance, net (EUR mn)

477

-575

-185

699

416

759

-184

-636

57

-3

951

-233

-450

-177

91

Dec

-111



Merchandise exports-- non-oil (y-o-y cum.)

10,0

7,5

4,2

1,9

1,9

-1,1

-2,5

0,1

1,4

1,4

8,5

9,5

8,7

9,6

9,6

Dec

9,6



Merchandise imports-- non-oil (y-o-y cum.)

4,6

-1,6

-7,4

-7,8

-7,8

-3,3

-2,8

3,8

3,2

3,2

7,2

6,4

6,6

8,1

8,1

Dec

8,1



Gross tourism revenue (y-o-y)

10,5

9,6

4,7

-4,4

5,2

3,8

-10,7

-7,9

7,5

-6,8

-4,9

10,1

12,6

11,1

11,1

Dec

0,8



International tourist arrivals (y-o-y)

45,6

15,0

2,6

-2,1

7,1

-6,2

-0,2

6,5

15,9

5,1

-1,8

9,0

12,2

5,9

9,7

Dec

-0,3



Employment

Unemployment rate

25,7

25,1

24,8

24,3

25,0

24,0

23,6

23,3

23,3

23,6

22,6

21,6

20,9





Nov

20,9

19,8

Employment growth (y-o-y)

0,9

2,0

2,1

2,8

2,0

3,1

2,4

2,0

0,6

2,0

1,4

2,4

2,4





Nov

2,6

1,8

Prices (y-o-y period average)

Headline inflation

-2,4

-2,1

-1,8

-0,6

-1,7

-0,9

-0,9

-1,0

-0,4

-0,8

1,4

1,3

1,0

0,8

1,1

Jan

-0,2

0,6

Core inflation

-0,7

-0,9

-0,5

0,3

-0,5

0,2

0,3

-0,3

-0,7

-0,1

-0,4

0,2

0,4

0,4

0,2

Jan

0,3

0,9

Producer prices excl.energy

-0,1

0,2

0,2

-0,2

0,0

-0,6

-0,8

-0,9

-0,6

-0,7

0,4

0,3

0,6





Nov

0,4







0,5









-0,8





0,2

Fiscal policy

Gov. balance as % of GDP (Programme definition, according to Budget 2018 )

Government debt as % of GDP (Programme definition,









-3,0













176,8









180,8









181,1





179,9

Revenues--Ordinary budget (cum. % change)

-1,8

-5,7

-6,7

-0,8

-0,8

4,3

6,9

9,7

7,6

7,6

0,4

-1,1

0,4

-0,2

-0,2

Jan

3,3



Expenditure--Ordinary budget (cum. % change)

-2,2

-6,7

-5,3

0,2

0,2

-2,3

2,7

1,5

0,7

0,7

-0,8

-3,2

-4,7

-1,9

-1,9

Jan

-6,3



according to EU Commission, Compliance Report, January 2018 )

Monetary sector (y-o-y, end of period)

Deposits of domestic private sector

-15,1

-26,0

-26,6

-23,5

-23,5

-12,0

0,5

1,6

3,4

3,4

3,1

3,4

4,6

4,7

4,7

Jan

4,9



Loans to private sector (incl. sec. & bond loans)

-2,5

-1,7

-1,5

-2,0

-2,0

-2,1

-2,0

-1,6

-1,5

-1,5

-1,3

-1,3

-0,8

-0,8

-0,8

Jan

-0,8



Mortgage loans (including securitized loans)

-3,3

-3,4

-3,5

-3,5

-3,5

-3,4

-3,4

-3,4

-3,5

-3,5

-3,3

-3,2

-2,9

-3,0

-3,0

Jan

-3,0



Consumer credit (including securitized loans)

-2,5

-2,3

-2,8

-2,3

-2,3

-1,7

-1,5

-0,7

-0,8

-0,8

-0,7

-0,7

-0,5

-0,5

-0,5

Jan

-0,6



Interest rates (period average)

10-year government bond yield

10,0

11,6

10,8

7,9

10,1

9,5

8,2

8,2

7,5

8,3

7,2

6,1

5,5

5,1

6,0

Feb

4,2



Spread between 10 year and bunds (bps)

967

1112

1011

730

955

919

805

823

733

820

689

577

502

469

559

Feb

345



1,08

1,11

1,07

1,1

1,18

1,18

1,13

Feb

1,23



Exchange rates (period average)

USD/euro

1,13

1,11

1,11

1,10

1,11

1,1

1,13

1,12

Sources: BoG, NSSG, MoF, ASE, Bloomberg and NBG estimates unless otherwise indicated

GREECE | NBG Macro Flash |March 2018| p. 13

NATIONAL BANK OF GREECE | Greece: Macro Flash

GREECE Macro View March 2018

NA TI ON A L B AN K OF GR E E C E

Editor: P. Mylonas, Deputy CEO, Head of Research, e-mail: [email protected] Tel: (+30210) 3341521, FAX: (+30210) 3341702. Main contributors to this issue (in alphabetical order): E. Alevizopoulou, E. Balikou, A. Gouveli, N. Magginas, G. Murphy, P. Nikolitsa. This analysis is provided solely for the information of professional investors who are expected to make their own investment decisions without undue reliance on its contents. Under no circumstances is it to be used or considered as an offer to sell, or a solicitation of any offer to buy. Any data provided in this bulletin has been obtained from sources believed to be reliable. Because of the possibility of error on the part of such sources, National Bank of Greece does not guarantee the accuracy, timeliness or usefulness of any information. The National Bank of Greece and its affiliate companies accept no liability for any direct or consequential loss arising from any use of this report.

Note: The analysis is based on data up to March 6, 2018, unless otherwise indicated

GREECE | NBG Macro Flash |March 2018| p. 14