The four reasons why exports are declining

By Dimitra Manifava

Over 2,500 enterprises have joined the Panhellenic Exporters Association (PSE) register since 2010 as companies seek new ways to sell their products and services following the dramatic contraction of the domestic market due to the prolonged recession.

The outward-looking trend has led exports to blossom over the last three years, peaking at the historic high of 27.61 billion euros (including oil products and lubricants) in 2012. The momentum of Greek exporters has attracted the interest of foreign funds in recent months, with some expressing an interest in investing.

However, “like the miracles that last for just three days, in the exports sector they have lasted for just three years,” PSE president Christina Sakellaridi told a press conference this week, referring to the signs of fatigue in the sector after a robust period.

In 2013 the value of Greek exports declined by 0.2 percent year-on-year, or 2.1 percent when oil products are exempted, while early estimates from the Hellenic Statistical Authority (ELSTAT) show that the declining course continued in January 2014.

The PSE chief attributed this negative development first to the cash flow problems that many Greek enterprises are facing, which are exacerbated by the fact that they are being forced to sell their products below cost in order to retain competitiveness. Sakellaridi also referred to the issue of the delay in the value-added tax rebates to exporters, stressing that in no other country in the world are companies placed under such pressure. However, she did concede that the delays are shorter compared with the past, while noting that some exporters collected rebates last year which had dated to 2009.

Greek exports have also been hit by the political unrest and unfavorable economic developments in traditional markets for Greek products such as Egypt, Syria, Turkey and Cyprus. The latest developments in Ukraine resulted in the cancellation of Greek orders, too. As yet, there has not been any impact on exports to Russia, a major importer of Greek products.

A third, significant reason that the rising course of exports has has come to an end has been the delay in reforms aimed at simplifying exporting procedures, although Sakellaridi did acknowledge that a degree of progress has been recorded.

The fourth factor is the absence of any strategy for exports that would focus interest on target markets. It is only in the last few years that markets with a strong Greek presence have been targeted efficiently, although in some cases, such as the US, precious time has been wasted and the situation appears irreversible. “Trade fairs are fine, but they do not suffice alone,” stated Sakellaridi.