A study released on Thursday by National Bank of Greece’s Strategic and Financial Analysis Department shows that an increase in corporate investment in the export sector of up to 14 percent of the country’s gross domestic product would after three years see GDP increase 3.3 percent and create 150,000 jobs.
However, for such a projection to be realized, confidence in the country’s prospects will have to be restored and consolidated and the necessary changes for the creation of an attractive investment environment be implemented for the Greek export standard to become sustainable in the long run.
According to the report, if that could be achieved, then it is expected that the country’s private sector could draw external funding of 20 billion euros by 2016, which could result in the aforementioned scenario. The study also foresees investors withdrawing from noncompetitive sectors of the economy and reinvesting in more competitive areas.
The report serves to dispel the myth of a rapid increase in exports and their key contribution in the reduction of the current account deficit. In the period from 2009 to 2012, two-thirds of the drop in the deficit was owed to to a drastic reduction in spending on imports, while it was only about one-third of the reduction that could be put down to the increase in exports and the decrease in public debt interest payments to foreign countries.
The National Bank study estimates that the value of imports substituted by domestic production amounted to 1.5 percent of GDP in 2012 and mostly concerned the sectors of food, drinks and homewares. Total expenditure on durable consumer goods, luxury items and investment commodities went down to 5.1 percent of GDP from about 10 percent in 2008.
The current account deficit came down from 9.9 percent of GDP in 2011 to 3.4 percent in 2012, while data for the first five months of this year point to the halving of the deficit recorded in the same period in 2012. The study concludes that the target for a zero deficit for 2013 appears realistic.
The basic scenario for the exports rebound combined with the economy’s return to growth at a rate of 2.5 to 3 percent in the next few years provides for an increase in trade exports to 14.4 percent of GDP by 2016, while all exports (goods and services) are expected to reach 31 percent of GDP.
The study estimates that the recovery of tourism this year, provided that the competitive pricing policy continues, could take tourism receipts up to 5.6 percent of GDP by 2016.
A gradual rise in chartering rates could see net shipping revenues rise to 4.8 percent of GDP by 2016.