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Greece Country Risk Report Q1 2016

  • December 2015
  • -
  • Business Monitor International
  • -
  • 49 pages

Core Views

Greece's economy will register modest growth in 2016, following alarge recession in 2015.Despite this, government spending cuts and dire domestic conditionswill ensure households remain under extreme pressure.Greece's political agenda will be dominated by the government'sprogress implementing bailout reforms, recapitalising of the bankingsector, and coping with the huge numbers of migrants entering thecountry.Greece's current account will remain firmly in surplus in 2016 and2017, reducing the potential for funding strains to emerge in thefinancial account.Major Forecast ChangesWe have upgraded our estimate for the current account to comein at 1.5% of GDP in 2015 from 0.8% previously, as the impact ofcapital controls has restricted imports even more than we expected.We have also revised up our forecasts for inflation to 0.5% in 2016and 1.2% in 2017, from -0.2% and 0.9% previously, as economicuncertainty pushes up food prices.

Table Of Contents

Greece Country Risk Report Q1 2016
Executive Summary 5
Core Views5
Major Forecast Changes5
Key Risks5
Chapter 1: Political Outlook 7
SWOT Analysis 7
BMI Political Risk Index 7
Domestic Politics 8
Reforms And Migrant Crisis To Dominate Agenda Into 20168
Greece's political agenda will be dominated by the government's progress in implementing bailout reforms, recapitalising the banking
sector, and coping with the huge numbers of migrants entering the country
TABLE: POLITICAL OVERVIEW8
Regional Politics 10
Lack Of Regional Response Escalating Impact Of Migrant Crisis10
The ongoing migrant crisis will continue to place severe strains on the functioning of EU institutions, domestic political relations and
social cohesion across the continent With no united policy at a regional level, or agreement among parties domestically on how to
tackle the crisis, social tensions are bound to increase, raising political risk across the EU
Long-Term Political Outlook 13
A Decade Of Austerity And Instability13
Greece's political landscape is likely to remain tumultuous over the coming years The legacy of fiscal profligacy and economic
distortions will leave an indelible mark on the Greek economy and society, with political voices becoming even more fragmented We
therefore expect a prolonged bout of austerity and instability in the decade ahead
Chapter 2: Economic Outlook 17
SWOT Analysis 17
BMI Economic Risk Index 17
Economic Growth Outlook 18
Economy Healthcheck: Return To Growth In 201618
Greece's economy will register modest growth in 2016, following a large recession in 2015 Despite this, government spending cuts and
dire financial and labour market conditions will ensure households remain under extreme pressure
TABLE: ECONOMIC DASHBOARD18
GDP BY Expenditure Outlook 20
TABLE: GDP GROWTH FORECASTS20
TABLE: PRIVATE CONSUMPTION FORECASTS20
TABLE: GOVERNMENT CONSUMPTION FORECASTS21
TABLE: FIXED INVESTMENT FORECASTS21
External Trade And Investment Outlook 22
Capital Controls To Drive Bigger C/A Surpluses22
Greece's current account will remain firmly in surplus in 2016-2017, reducing the potential for funding strains to emerge in the financial
account
TABLE: NET EXPORTS FORECASTS22
Outlook On External Position 24
TABLE: CAPITAL AND FINANCIAL ACCOUNT BALANCE24
TABLE: TOP FIVE GOODS EXPORTS IN 201424
Monetary Policy 25
Disinflationary Pressures Past Worst25
While inflationary pressures will remain extremely weak in Greece in coming quarters, a return to positive price growth looks possible in
2016
TABLE: TOP FIVE GOODS IMPORTS IN 201425
TABLE : MONETARY POLICY26
Banking Sector Update 27
Capital Controls To Remain In Place27
The banking sector in Greece will remain on life support over the course of the coming months, with its external financing needs
entirely covered by the European Central Bank Declining asset quality and the deteriorating economic environment imply that further
recapitalisation will be required before capital controls can be removed
TABLE: BANKING SECTOR RISK SNAPSHOT27
Chapter 3: 10-Year Forecast 31
The Greek Economy To 2024 31
A Lost Decade Ahead31
With international credit conditions unlikely to return to pre-2008 levels over the foreseeable future, we expect both consumer and
investment spending to remain subdued over the long term This will anchor the Greek economy onto a lower growth path than that
seen leading up to the global credit crisis Moreover, while trade rebalancing has closed the current account gap, the adjustment
process has been driven more by import compression rather than substantial competitiveness gains in the export sector, which suggests
Greece's longer-term growth trajectory will be adversely affected
TABLE: LONG-TERM MACROECONOMIC FORECASTS31
Chapter 4: Operational Risk 33
SWOT Analysis 33
Operational Risk Index 33
Operational Risk 34
TABLE: DEVELOPED STATES - LABOUR MARKET RISK34
TABLE: DEVELOPED STATES - LOGISTICS RISK37
TABLE: DEVELOPED STATES - CRIME AND SECURITY RISK40
TABLE: DEVELOPED STATES - TRADE AND INVESTMENT RISK43
Chapter 5: BMI Global Macro Outlook 47
Global Outlook 47
Emerging Markets Bending, Not Breaking47
TABLE: GLOBAL ASSUMPTIONS47
TABLE: DEVELOPED STATES, REAL GDP GROWTH, %48
TABLE: BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, % 48
TABLE: EMERGING MARKETS, REAL GDP GROWTH, %49

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