Investment-led reboot of the economy: such is the name of the game in Greece while the new budget (for 2018, the year the current Adjustment Programme – the third in a row – is supposed to end) is surfacing. The official numbers talk of a 2.4% GDP growth (with the unemployment rate for the first time in 5 years expected/hoped-for at less than 20%), but with public-sector investment at -1.1%, even the Government-friendly Fiscal Council wonders where the overall boost will come from. The only answer, of course, is “from private investment”: with real-estate at a permanent nose-dive and with NPLs peaking 45% for business loans, the proverbial Diogenes lantern will find it quite difficult to locate willing investors.
Under such circumstances, FDI seems to be the main source of hope for the year to come. “Foreign” being also the cover for capital held by either Greece-resident nationals who have been hoarding liquidity abroad (to escape the trap of capital controls) or Greek nationals living abroad. The Greek diaspora being what it is, the latter figure is far from negligible; but as foreign experts have been often pontificated, if Greece-based Greeks do not invest in their own country what can be expected of FDI?
Unfortunately, as the Governor of the Bank of Greece – Yannis Stournaras – explained to the hand-picked British-Hellenic Chamber of Commerce audience last week, the overall investment climate is not friendly enough – yet. Stournaras used to be Finance Minister three years ago. His current successor, Euclid Tsakalotos, is clearly more upbeat: to him, the next two years might well a period of “investment glut”, with its own difficulties. Well, the future will tell.