Jan 2020 Greek economy stabilised and growing again
Prisma Reports talks to Mr. Marios Psaltis, CEO of PwC Greece
“After almost 10 years of recession, the Greek economy has stabilised and started growing again. The economic conditions have been gradually improving since 2018 after the exit from the bailout programme. Following the election of a new stable centrist policy government with a clear majority in the Summer of 2019, the overall business mood improved even further.
Overall, Greece has achieved a considerable measure of macroeconomic stability and this is reflected in the reduction in Government Bond yields. However, there are still challenges on a variety of fronts including: income and social security taxes on employment are extremely high which impedes a speedier reduction of unemployment, the pension system is still subsidised by relatively high budget transfers, the tax base needs to broaden and non performing loans on Banks’ balance sheets need accelerated reduction. The government recognises that now is the time to drive its reform agenda including the public sector, education and judicial systems that are crucial areas for the longer term sustainability of the economy.
The new government is business and investment friendly and has already unblocked some landmark projects with an ambition to substantially increase Foreign Direct investments which is one of its top priorities. This approach has already improved the broader investment profile and attractiveness of the country and is creating a virtuous circle.
One of the side effects of the crisis has been the underinvestment in technology and R&D and this affects the ability of Greek companies to compete in a global environment. The businesses that managed to navigate through the crisis now urgently need to go through a massive transformation that can be facilitated by the power of technology. This is a big opportunity for the future and this is also true for the public sector, where technology can be the catalyst for change and transformation. Despite the high unemployment, businesses struggle to find the right talent and people with the right skills for the new age. This paradox needs to be addressed with targeted and meaningful upskilling strategies within both public and private sectors. Addressing the skills gaps and technology mismatches creates a constructive and effective way to support the workforce to adapt to the needs of the future.
Another key area, where the Greek economy needs to improve is its performance in embedding a robust governance culture and practices in a fast changing and digital environment. Furthermore, regulatory quality is affected by overregulation, complexity, legal fragmentation and relatively poor execution of laws.
Institutional strengthening through good governance practices, transparency and effective application of the rule of law is a critical component of a sustainable and prosperous economy in order to be reliable and credible to international investors.
In a nutshell, Greece needs to adapt to the new age and become more agile, open to change, innovative and attractive for investments.”