by Nick Papandreou
The list of problems facing the economy are so many they would fill a book. The most obvious are the effects of the pandemic on the economy, regional and global geopolitical turmoil, supply chain blockages that have led to energy shortages, the extreme weather conditions that seems to have put most countries on a permanent emergency call status, inflation, and the uncertain future of Chinese-US relations. I am sure that any reader can add to the list.
And yet, for all this, the Greek economy has managed to do better than expected. The country’s growth rate last year was around 8.1%, due to a tremendous rebound of 13.9% in the third quarter. The recent loan of three billion euros came with a relatively low interest rate of 1.8 percent (10-year bond issue). It is proof that the global system now trusts the country.
Real estate – for anyone looking to rent or buy or build – is booming and there appears to be a frenzy of foreign investors. There are many explanations for this boom – the Ellinikon airport project has attracted interest globally and all apartments in the skyscrapers were sold within months, based only on the architectural designs; the pandemic has made Greece an attractive country for people who can work from their home – good food, decent weather, inexpensive labor; the surrounding countries are incredibly unstable. Turks and Lebanese for example are finding Greece a friendly place in which to live.
There is much talk of the large-scale Israeli investors who have moved into real estate. The growing warmth between these two nations, after decades of distance, has made the market attractive for Israelis who wish to visit and live in a country much like their own. And the first two cannabis production greenhouses in Corinth are Israeli investments with local partners. For those who don’t know, Greece has legalized the production and export of cannabis. After a wobbly start with too many restrictions, the legislative framework has now been greatly simplified. This market will grow fast in the next few years.
Relations with the Saudis and Abu Dhabi have never been better and funds from those countries have gone primarily to alternative energy projects. According to Bloomberg Green, both domestic and foreign companies are expected to step up after almost 18 billion euros ($21 billion) of public and private funds were earmarked for everything from solar panels to energy storage. According to the Bank of Greece, green investments will lead to an increase in real economic output by 7% by 2026 and lead to 180,000 new jobs. Some of the smaller islands have become zero-carbon laboratories for companies like Volkswagen.
In December, Amazon announced that Greece will be the site of one of 11 of its Amazon Web Services Local Zones that it plans to establish in Europe. This is yet another vote of confidence and is the result of the country’s turn to digitization in all areas especially the bureaucracy. Finally one can get driver license renewal online, digital signatures are accepted for many government documents and even consensual divorce can be done through the internet. Tax returns no longer require endless trips to the tax office but are done only online. Pandemic notwithstanding, the country has had a remarkable recovery in the tourism industry.
After a decade of darkness, how come? I would offer the eccentric argument that Greece has recently become the “IT” country. The global banking crisis that began in 2008 and led to the country’s near-bankruptcy put Greece in the news for the better part of the last decade. The “world” was inundated with articles – mostly negative – about Greece. But as the country recovered, the interest in Greece had already been well established and the interest did not wane. In a sense, the country received free “advertising” for years – even bad news is better than no news – and so the markets and the tourists were well attuned to explore the new opportunities Greece offers.
However, the average citizen still suffers. The injection of EU pandemic mitigating funds probably saved the day (and the government). The relatively high rates of growth and the good news do not fully address the loss of businesses and income and growing inequality. The business friendly government has not done much to resolve the underlying structural problems. The massive civil administration and outdated public attitudes about the role of the state are the major stumbling blocks that even this liberal government does not wish to take on because of the high political cost of reforming the state-run education and health sectors.
Growth, new investments and a rosy outlook provide the means to effect major reforms, reforms that can unleash the economy’s tremendous potential.
This article is published in the January / February issue available here.