Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.
2019 H2:
A new beginning for
the Greek economy
Gikas Α. Hardouvelis
University of Piraeus
www.hardouvelis.gr
19/6/2019
Νέο...
A new beginning for the Greek economy
 The Greek crisis had two phases, the necessary Phase- I and the
unnecessary Phase ...
65
70
75
80
85
90
95
100
105
110
115
0 1 2 3 4 5 6 7 8 9 10 11 12 13
76.1
77.8
79.5
Greece
Crisis Stage I
 Phase ΙΙ costs...
 Prior to the Int/nal crisis
little use of ECB borrowing
 Lehman episode froze the
interbank market, raising
borrowing t...
Target drivers of growth: Exports & Investment
Gikas A. Hardouvelis 5
 Consumption
ought to increase
at a lower rate
than...
Investment needs a major boost
 From €65bn in
2007 (25.9% of
GDP) to
€22.8bn in
2018 (12.0%)
 Expected
increase in
2019 ...
Debt sustainability & the fiscal mix
 It is widely agreed by all
political parties that a
reduction in tax rates is
neede...
Cost competitiveness improves in the early crisis years
(during Phase-I)
Index = 100 in year 2000
Source: BoG
 Deteriorat...
62.4 60.4 60.7 62.7 63.4 68.6 68.7 68.0 68.2 68.1
77.8
74
75
75
76
76
77
77
78
78
59
60
61
62
63
64
65
66
67
68
69
2009 20...
Credit growth (yoy) Interest rates
Source: BoG Source: BoG
Signs of improvement in corporate credit conditions
 Credit gr...
Group level, Dec-2018 Eurobank NBG Alpha Piraeus Total
1. Total Loans - gross (€bn) 45.0 39.6 52.5 53.1 190.2
2. Non-Perfo...
33.4
63.1
20
25
30
35
40
45
50
55
60
65
70
2016 2070
10.82 10.76
10.53
9.92
9.40
8.89
8.26
7.66
6.0
6.5
7.0
7.5
8.0
8.5
9....
Gikas A. Hardouvelis 13
Summary: Can we jump-start the economy?
Although 5 years were lost due to the unnecessary Stage II...
2019 H2: A new beginning for the Greek economy
2019 H2: Νέο ξεκίνημα για την ελληνική οικονομία
Gikas Α. Hardouvelis
Unive...
Upcoming SlideShare
Loading in …5
×

19.6.2019, Παρουσίαση Γκ. Χαρδούβελη στο Συνέδριο "Η Ελλάδα Μετά ΙΙΙ: Η ανασύσταση της μεσαίας τάξης"

1,854 views

Published on

Για τρίτη συνεχή χρονιά, ο Κύκλος ιδεών για την Εθνική Ανασυγκρότηση,
σε συνεργασία με τη Συμεών Γ. Τσομώκος Α.Ε., πραγματοποιούν το ετήσιο διήμερο συνέδριο H ΕΛΛΑΔΑ ΜΕΤΑ
στις 19 και 20 Ιουνίου 2019
στο ξενοδοχείο Divani Caravel.
Κεντρικό θέμα στο φετινό συνέδριο είναι: Η ανασύσταση της μεσαίας τάξης

Κύκλος ΙΙ: Οι επιπτώσεις της περιόδου 2009- 2019 στη μεσαία τάξη

https://ekyklos.gr/19-20-iouniou-ellada-meta-iii-i-anasystasi-tis-mesaias-taksis.html

Published in: Data & Analytics
  • Be the first to comment

  • Be the first to like this

19.6.2019, Παρουσίαση Γκ. Χαρδούβελη στο Συνέδριο "Η Ελλάδα Μετά ΙΙΙ: Η ανασύσταση της μεσαίας τάξης"

  1. 1. 2019 H2: A new beginning for the Greek economy Gikas Α. Hardouvelis University of Piraeus www.hardouvelis.gr 19/6/2019 Νέο ξεκίνημα για την ελληνική οικονομία
  2. 2. A new beginning for the Greek economy  The Greek crisis had two phases, the necessary Phase- I and the unnecessary Phase – II  Many imbalances were cured in Phase I (Fiscal deficits eliminated, current account deficits shrank, ULC competitiveness restored)  Yet Phase II prolonged the stagnation, with democratic institutions and the financial sector under threat and the population over- levered and in despair for the future  A jump–start is now required: What are the major challenges ahead?  Reverse the current disinvestment, which destroys potential growth  Correct the fiscal mix with incentives for work and creativity  Restore quality competitiveness with privatizations, public sector reforms, investment in IT & innovation, educational reform  Help cure the financial sector with a drastic NPE reduction  Address the population growth & improve social cohesiveness Gikas Hardouvelis 2
  3. 3. 65 70 75 80 85 90 95 100 105 110 115 0 1 2 3 4 5 6 7 8 9 10 11 12 13 76.1 77.8 79.5 Greece Crisis Stage I  Phase ΙΙ costs annually 7.8 ppts or €18bn  Was unnecessary  Real GDP at 100 in 1929 for USA 2007 for Greece  After 10 years, USA at 110.1 in 1939, but Greece at 74.6 in 2017  Forecast as of Fall 2014: Greece at 82.4 in 2017 Two stages prolong the Greek crisis: Economic imbalances drive the first – Politics the second Years after recession started USA Annual loss 25.4% relative to year 0 82.4 74.6 110.1 Crisis Stage II Annual opportunity cost due to Phase II Int/nal Crisis Source: Ameco, EC, BEA 3 EC Spring 2019 forecasts Gikas Hardouvelis
  4. 4.  Prior to the Int/nal crisis little use of ECB borrowing  Lehman episode froze the interbank market, raising borrowing to €55bn.  Greek crisis raised dependence to above €100bn.  Since July 2011 Emergency Liquidity Assistance (ELA) • Max value in 11/2012 • Down to ZERO in 11/2014 • Back up to €86.8bn in 6/2015 • May 2019: ELA zero ( 5th consecutive month ) plus €8.1bn in ECB funding  ELA borrowing costs 1.5% more due to low quality collateral  April 2019: interbank market funding at €25.0bn (Aug.-15: €6.3 bn) The two stages of the Greek crisis are revealed in the Eurosystem dependence of the domestic banks Source: BoG 4Gikas Hardouvelis Crisis Stage II
  5. 5. Target drivers of growth: Exports & Investment Gikas A. Hardouvelis 5  Consumption ought to increase at a lower rate than GDP  Exports defied the trend and increased (by 60% since 2009) and now hold a 36% share in GDP from 19% in 2007  Investments is the key as they boost potential growth 2018 2018 2019 2020 bn (nominal) Real (YoY%) Real (YoY%) Real (YoY%) GDP 184.7 1.9 2.3 2.3 Consumption 125.6 (68%) 1.1 1.0 1.2 Gov. Cons. 35.4 (19%) -2,5 1.6 0.6 Investment 22.8 (12%) -12,2 3.9 12.9 Exports 66.7 (36%) 8,7 5.9 5.4 Imports 67.2 (36%) 4,2 3.5 5.7 GDP Deflator 0.5 1.1 1.4 HICP (YoY%) 0.8 0.9 1.3 Unemploymen 19,3 17,8 16,5 Notes 1.EC’s Spring 2019 forecast: real GDP growth at 2.2% and 2.2% for 2019 and 2020 respectively 2.Real GDP growth rate consensus forecast for 2019 and 2020 at 1.8% and 1.9% respectively (source: Focus Economics, Reuters & Bloomberg average)
  6. 6. Investment needs a major boost  From €65bn in 2007 (25.9% of GDP) to €22.8bn in 2018 (12.0%)  Expected increase in 2019 at 13.2% of GDP  Yet 10 of the 14 ppts reduction due to real estate  Public investment at 3.0% GDP in 2018 relative to 4.9% in 2007  Future seems brighter: OECD claims 80 projects are in the pipeline until 2023 with a budget of €20bn 6Gikas A. Hardouvelis 21.7% 21.2% 21.4% 22.3% 22.9% 23.2% 22.8% 22.0% 22.2%22.3% 22.5% 23.2% 23.9% 23.4% 20.6% 21.0% 21.3% 19.9% 19.6% 20.0% 20.6% 21.0% 21.0% 21.4% 21.… 21.7% 18.… 19.6% 19.2% 21.7% 21.… 22.7% 22.7% 22.… 25.1% 23.7% 21.1% 24.7% 25.9% 23.6% 18.1% 17.0% 14.7% 12.0% 11.2% 11.9% 10.4% 11.1% 12.0% 12.0% 13.2% 14.6% 10% 12% 14% 16% 18% 20% 22% 24% 26% 28% 1995 2000 2005 2010 2015 2020 EA-GCF GR-GCF Forecasts Source: AMECO
  7. 7. Debt sustainability & the fiscal mix  It is widely agreed by all political parties that a reduction in tax rates is needed. But expenditure cannot decline equally easily  Would a reduction in the target primary surpluses of 3.5% GDP for 2019, 2020, 2021 & 2022 create a debt- sustainability problem?  Most likely, no. Debt/GDP would likely decline if multiplier is 1, because 1 ppt reduction in surplus is counter- balanced by 1.8% increase in GDP  Is it politically feasible to reduce those targets to the average 2023-20260 target of 2.2% without sacrificing credibility? Source: BoG 7Gikas A. Hardouvelis
  8. 8. Cost competitiveness improves in the early crisis years (during Phase-I) Index = 100 in year 2000 Source: BoG  Deterioration by 33% in cost competitiveness (ULCT) up to 2009  Then from 2010 to 2014 improvement in ULCT by 38%  Stagnation in ULCT from 2015 to the present (during Crisis Phase II)  Need for Quality Improvement by reforming the public sector, the justice & educational systems, etc. 8Gikas A. Hardouvelis
  9. 9. 62.4 60.4 60.7 62.7 63.4 68.6 68.7 68.0 68.2 68.1 77.8 74 75 75 76 76 77 77 78 78 59 60 61 62 63 64 65 66 67 68 69 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 DTF: GR (lhs) STAGNATION StructuralBreakinDB 9 Crisis Phase - II Quality competitiveness: Improvement in Phase I, deterioration/stagnation in Phase II  DB ranking: Greece ranked 72nd among 190 countries in 2018, down from 67th in 2017, 60th in 2015  Earlier, there was an improvement to 60 from 109 in 2009 WB Doing Business Distance to Frontier (Best Practise:100) Source: World Bank Gikas A. Hardouvelis
  10. 10. Credit growth (yoy) Interest rates Source: BoG Source: BoG Signs of improvement in corporate credit conditions  Credit growth for non-financial corporations turns positive in 2019, following 8 years of continuous decline  Loan rates to non-financial corporations on a downward trend since 2012  Yet household credit continues to shrink and loan rates remain steady  Bank profitability is squeezed due to NPLs, regulation, IT competition in retail services 10Gikas A. Hardouvelis
  11. 11. Group level, Dec-2018 Eurobank NBG Alpha Piraeus Total 1. Total Loans - gross (€bn) 45.0 39.6 52.5 53.1 190.2 2. Non-Performing Exposures (€bn) 16.7 16.2 25.7 27.3 85.9 3. NPE ratio (%) 37.0% 40.9% 49.0% 51.5% 45.2% 4. Non-Performing Loans (€bn) 13.2 11.8 17.6 17.4 60.0 5. NPL ratio (%) 29.3% 29.9% 33.5% 32.8% 31.6% 6. Provisions (€bn) 8.8 9.5 12.3 13.3 44.0 7. Regulatory Capital CET1 (€bn) 6.5 5.6 8.3 6.5 26.8 8. Texas Ratio 1 = 4/(6+7) 86.5% 78.3% 85.5% 87.7% 84.8% 9. Texas Ratio 2 = 2/(6+7) 109% 101% 125% 138% 121% 10. CET1/RWAs 16.2% 16.0% 17.4% 13.7% 15.8% Notes: 1. In the theoretical stress situation in which all NPL value is lost, all of four systemic banks survive because they all have a Texas Ratio less than unity. For NPEs, those ratios are larger than unity. 2. About 70% of regulatory capital is DTC and without it, no bank survives. 3. In January 2018, new IFRS-9 rules impose additional capital needs over the following five years, to the tune of €5.9bn. However this is gradually phased in over 5 years 4. 2018 stress tests did not result in recapitalization of the Greek banks Source: Calculations based on banks’ published data The great challenge of non-performing loans & exposures 11Gikas Hardouvelis
  12. 12. 33.4 63.1 20 25 30 35 40 45 50 55 60 65 70 2016 2070 10.82 10.76 10.53 9.92 9.40 8.89 8.26 7.66 6.0 6.5 7.0 7.5 8.0 8.5 9.0 9.5 10.0 10.5 11.0 2011 2016 2020 2030 2040 2050 2060 2070 LastCensus Projections Adverse Demographics: Population and Pensions 12Gikas Hardouvelis GR Population 2011-2070 Source: 2018 Ageing Report GR Old Age Dependency Ratio 2016 - 2070  According to the EC’s 2018 Ageing Report the Greek population is expected to decrease at 7.66 mn in 2070 from 10.82 in the 2011 population census  The Greek old age dependency ratio (the ratio between inactive population above 64 y.o. and the employed aged 22-64) is expected to increase to 63.1% in 2070 from 33.1% in 2016 (Eurostat forecasts).
  13. 13. Gikas A. Hardouvelis 13 Summary: Can we jump-start the economy? Although 5 years were lost due to the unnecessary Stage II of the crisis, which brought an annual loss of at least €20bn in GDP and disillusionment among citizens, a switch in the economic paradigm can quickly materialize iff:  Credibility in policy comes back  A multi-year plan of tax reforms is announced and gets legislated right away  A multi–year plan of reforms in education, IT development, public administration is announced  Public & Private Investment, Privatizations & FDI get boosted  Guaranteed minimum income is promoted together with a social service component The long term headache of population depletion can be reversed if economy picks up momentum and Greece becomes a hub for creativity & innovation, not just a tourist destination
  14. 14. 2019 H2: A new beginning for the Greek economy 2019 H2: Νέο ξεκίνημα για την ελληνική οικονομία Gikas Α. Hardouvelis University of Piraeus www.hardouvelis.gr 19/6/2019 Thank you for your attention! 14

×