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Ilias Lekkos [email protected] Irini Staggel [email protected] Kostas Kefalas [email protected] Piraeus Bank 4 Amerikis Street, 105 64, Athens, Greece Tel: (+30) 210 328 8187, Fax: (+30) 210 328 8605

[email protected]

Bloomberg Page: <PBGR>

The discourse on the Greek economy currently revolves around 4 main themes:

Fiscal Gap

Funding Gap

Debt sustainability

Funding for Growth

2 September 2013

In terms of budget execution, it hasn’t been a smooth ride but the government has made a

remarkable effort and we believe it is going to be on target. The fiscal gap identified for 2015-

2016 amounts only to €4.1bn (or 2% of GDP).

A small funding gap does exist due to lower than expected privatization receipts and the fact that

NCBs reneged on their promise to roll over maturing debt. The funding gap is estimated to

€10.9bn for 2014-2015.

Debt sustainability is significantly more contentious than the fiscal and funding gaps. Troika’s DSA

was always controversial (at least to us), priced to perfection and with a substantial degree of

reverse engineering. It is our view that a decision should not provide a short-term patch but a

viable and robust long-term solution.

Funding for growth. Our long term view is that due to the decline in disposable income and the

fiscal consolidation effort both private and public consumption will continue to decline.

Furthermore, credit constraints and high interest rates do not create an environment conductive to

private sector investment. As a result an investment-led recovery can materialize only if the public

sector increases its capital expenditure on large infrastructure projects. In order for that to

happen the necessary funds must be appropriated preferably from EU Structural Funds.

3 September 2013

Developments in the Greek economy are turning out to be better than our baseline scenario. The

main driver behind that improvement is the better than expected Q2 GDP growth that came in at

-3.8% versus -6.4% in the same quarter of 2012.

The main driving forces of this improvement seem to be the performance of the accommodation &

food and beverage service activities industries and other services, due to the positive impact of

tourism, as well as the positive contribution of the external trade balance. Nevertheless based on

the currently available data, the economy in the first half of 2013 has contracted by 4.7% which

creates an up-side risk for our real GDP forecasts.

One risk factor comes from nominal GDP which in H1-2012 shrank by 6.65%. This gap is

indicative of a very large and negative GDP deflator which is very difficult to reconcile against the

very mild CPI deflation recorded thus far.

On the positive side though, the much better than originally envisaged tourism season will exert a

positive impact on Q3 macro data.

Tourism recovery in conjunction with a series of government sponsored employment programs will

also contribute to the deceleration in the pace of unemployment expansion.

4 September 2013

5 September 2013 Source: Bank of Greece, ELSTAT, IMF Country Report No. 13/241, July 2013, Piraeus Bank Research

*Calculations based on program definitions as outlined in the TMU.

Piraeus Bank

2013

Real GDP Growth (YoY % change) -3.1 -4.9 -7.1 -6.4 -5.5 to -5.0

Nominal GDP

(billion €) 231.1 222.2 208.5 193.7 180 to 182

(YoY % change) -0.9 -3.9 -6.1 -7.1 -7.0 to -6.0

Inflation 1.2 4.7 3.3 1.5 -0.8 to 0.0

Unemployment rate

(% of labour force) 9.5 12.5 17.7 24.2 27.5 to 28.5

Current Account Balance

(billion €) -25.8 -22.5 -20.6 -6.5 -3.0 to -2.0

(% of GDP) -11.2 -10.1 -9.9 -3.4 -1.7 to -1.1

General Government Primary Balance*

(billion €) -24.2 -10.9 -4.9 -2.5

(% of GDP) -10.5 -4.9 -2.4 -1.3

General Government Debt

(billion €) 299.7 329.5 355.2 303.9 320

(% of GDP) 129.7 148.3 170.3 156.9 176 to 178

balanced

Economic Outlook

2009 2010 2011 2012

Source: IMF Country Report 13/241, July 2013

Selected Economic Indicators

The IMF is expecting an investment-led recovery.

6 September 2013

Source: European Commission DG ECFIN, Piraeus Bank Research

Economic Climate Tracer

According to our mapping of the business cycle, the Greek business climate seems to be exiting the

contraction phase.

7

-4.0

-3.0

-2.0

-1.0

0.0

1.0

2.0

-0.25 -0.2 -0.15 -0.1 -0.05 0 0.05 0.1 0.15

level

mom change

downswing expansion

contraction upswing

July '13

Jan '00

September 2013

Source: Bank of Greece, Teiresias, Bloomberg, Ministry of Finance, Piraeus Bank Research

Greek Financial Distress Index

Our Financial Distress Index (FDSI), which reflects the conditions of liquidity and solvency not only of

the banking sector, but of the Greek economy as a whole (i.e. financing needs of the Greek

Government, current account deficit, credit bureau data and changes in loans and deposits), has

shown a remarkable retrenchment, mirroring the substantial decline in the “financial stress” of the

Greek economy.

8 September 2013

-4.0

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

Jan-0

3

Jun-0

3

Nov-0

3

Apr-

04

Sep-0

4

Feb-0

5

Jul-05

Dec-

05

May-0

6

Oct

-06

Mar-

07

Aug-0

7

Jan-0

8

Jun-0

8

Nov-0

8

Apr-

09

Sep-0

9

Feb-1

0

Jul-10

Dec-

10

May-1

1

Oct

-11

Mar-

12

Aug-1

2

Jan-1

3

Jun-1

3

The Current Account shows an unprecedented improvement…

Source: Bank of Greece, Piraeus Bank Research

Current account balance (cumulative, mn €)

9 September 2013

-25000

-20000

-15000

-10000

-5000

0Ja

n.

Jan.-

Feb.

Jan.-

Mar.

Jan.-

Apr.

Jan.-

May

Jan.-

Jun.

Jan.-

Jul.

Jan.-

Aug.

Jan.-

Sep.

Jan.-

Oct

.

Jan.-

Nov.

Jan.-

Dec.

2010 2011 2012 2013

Source: IMF, MinFin, EFSF, Piraeus Bank Research

Disbursements of the Economic Programmes (€ bn)

…while Official Sector Funding to Greece has resumed.

Currently the combined disbursements of the two economic programmes amount to €214.5 bn,

€73.1 bn from the first and €141.4 bn from the second.

10

20.0

29.131.6

38.1

53.1 65.073.1 111.8

143.5

147.7 148.7

183.0188.2 191.0

205.2 210.2 214.5

0

50

100

150

200

250

0

5

10

15

20

25

30

35

40

45

May-1

0

Sep-1

0

Dec-

10

Jan-1

1

Mar-

11

Jul-11

Dec-

11

Mar-

12

Apr-

12

May-1

2

June-1

2

Dec-

12

Jan-1

3

Feb-1

3

May-1

3

June-1

3

July

-13

EU - EFSF other tranches Bank recapitalisation PSI & DBB

EU -Bilateral IMF Total (cumulative), RHS

September 2013

Source: MinFin, Piraues Bank Research

Primary Balance (State Budget, cumulative, mn €)

…and Fiscal Consolidation is progressing.

11 September 2013

-10,000

-8,000

-6,000

-4,000

-2,000

0

2,000

4,000

January

Jan-F

eb

Jan-M

ar

Jan-A

pr

Jan-M

ay

Jan-J

un

Jan-J

ul

Jan-A

ug

Jan-S

ep

Jan-O

ct

Jan-N

ov

Jan-D

ec

2010 2011 2012 2013

Source: ELSTAT, Piraeus Bank Research

GDP (YoY % change, nsa data)

…but Greece remains in recession.

Since the second quarter of 2012, the rate of decline in real GDP is lower than the equivalent for GDP at

current prices. This divergence indicates a negative deflator, which expanded in late 2012.

This divergence is partly associated with investment activity - which includes the construction sector and

housing – and with public consumption, which includes wage costs and primary expenditures.

12

GDP deflators

September 2013

-10.0

-5.0

0.0

5.0

10.0

15.0

Q1/0

2

Q3/0

2

Q1/0

3

Q3/0

3

Q1/0

4

Q3/0

4

Q1/0

5

Q3/0

5

Q1/0

6

Q3/0

6

Q1/0

7

Q3/0

7

Q1/0

8

Q3/0

8

Q1/0

9

Q3/0

9

Q1/1

0

Q3/1

0

Q1/1

1

Q3/1

1

Q1/1

2

Q3/1

2

Q1/1

3

Constant prices Current prices

-15.0

-10.0

-5.0

0.0

5.0

10.0

15.0

20.0

Q1/0

9

Q2/0

9

Q3/0

9

Q4/0

9

Q1/1

0

Q2/1

0

Q3/1

0

Q4/1

0

Q1/1

1

Q2/1

1

Q3/1

1

Q4/1

1

Q1/1

2

Q2/1

2

Q3/1

2

Q4/1

2

Q1/1

3

Q2/1

3

Private Consumption Public ConsumptionGross Capital Formation Gross Fixed capital formationExports ImportsGDP


GDP (€ mn, constant prices)

Private Consumption

(€ mn, constant prices) Public Consumption

(€ mn, constant prices)

Gross Fixed Capital Formation


13

145,000

155,000

165,000

175,000

185,000

195,000

205,000

215,000

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

GDP

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

55,000

60,000

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Gross fixed capital formation

90,000

100,000

110,000

120,000

130,000

140,000

150,000

160,000

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Private Consumption

25,000

27,000

29,000

31,000

33,000

35,000

37,000

39,000

41,000

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Public Consumption

September 2013


Exports of goods and services

(€ mn, constant prices) Imports of goods and services


14

45000

50000

55000

60000

65000

70000

75000

80000

85000

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Imports of goods and services

30000

35000

40000

45000

50000

55000

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012


September 2013

Households’ Disposable Income &

Consumption (YoY %, current prices )

Source: ELSTAT, European Commission DG ECFIN, Piraeus Bank Research

Hiring Intentions

(normalized data, sa, 3m moving average)

The decline in consumption reflects lower incomes and higher unemployment.

15

-15.0

-10.0

-5.0

0.0

5.0

10.0

15.0

20.0

25.0

30.0

Q1/0

4

Q3/0

4

Q1/0

5

Q3/0

5

Q1/0

6

Q3/0

6

Q1/0

7

Q3/0

7

Q1/0

8

Q3/0

8

Q1/0

9

Q3/0

9

Q1/1

0

Q3/1

0

Q1/1

1

Q3/1

1

Q1/1

2

Q3/1

2

Q1/1

3

Gross Disposable Income Final consumption

-2.5

-2.0

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

Jan-0

2

Jul-02

Jan-0

3

Jul-03

Jan-0

4

Jul-04

Jan-0

5

Jul-05

Jan-0

6

Jul-06

Jan-0

7

Jul-07

Jan-0

8

Jul-08

Jan-0

9

Jul-09

Jan-1

0

Jul-10

Jan-1

1

Jul-11

Jan-1

2

Jul-12

Jan-1

3

Jul-13

September 2013

Source: ELSTAT, IMF country report 13/241, Piraeus Bank Research

General Government’s Primary Expenditure (bn €)

Public expenditure is expected to continue its sharp contraction until end-2014.

16

60.0

70.0

80.0

90.0

100.0

110.0

120.0

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

September 2013

Source: European Commission DG EcFin, ELSTAT, Piraeus Bank Research

Real-time Output Gap Index

And after 5 years of contraction, a substantial gap has developed between supply and demand.

17

-7.0

-6.0

-5.0

-4.0

-3.0

-2.0

-1.0

0.0

1.0

2.0

Q1/9

8

Q4/9

8

Q3/9

9

Q2/0

0

Q1/0

1

Q4/0

1

Q3/0

2

Q2/0

3

Q1/0

4

Q4/0

4

Q3/0

5

Q2/0

6

Q1/0

7

Q4/0

7

Q3/0

8

Q2/0

9

Q1/1

0

Q4/1

0

Q3/1

1

Q2/1

2

Q1/1

3

September 2013

Level of Capacity Utilization in

Manufacturing Industry (%, sa)

Data collected in January, April, July and October each year

Source: European Commission DG EcFin, ECB, BoG, Eurostat, ELSTAT, Piraeus Bank Research

Average Real Interest Rate on New bank loans (<€1mn) to Non-financial corporations

(nominal rate minus change in HICP, %)

Excess supply and high interest rates will keep investments at low levels.

18

63.0

65.0

67.0

69.0

71.0

73.0

75.0

77.0

79.0

81.0

Q1/0

1

Q3/0

1

Q1/0

2

Q3/0

2

Q1/0

3

Q3/0

3

Q1/0

4

Q3/0

4

Q1/0

5

Q3/0

5

Q1/0

6

Q3/0

6

Q1/0

7

Q3/0

7

Q1/0

8

Q3/0

8

Q1/0

9

Q3/0

9

Q1/1

0

Q3/1

0

Q1/1

1

Q3/1

1

Q1/1

2

Q3/1

2

Q1/1

3

Q3/1

3

Current level of capacity utilization (%)

Average (2001 - 2012)

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

Q1/0

9

Q2/0

9

Q3/0

9

Q4/0

9

Q1/1

0

Q2/1

0

Q3/1

0

Q4/1

0

Q1/1

1

Q2/1

1

Q3/1

1

Q4/1

1

Q1/1

2

Q2/1

2

Q3/1

2

Q4/1

2

Q1/1

3

Q2/1

3

Euroarea Greece

September 2013

Source: ELSTAT, Bank of Greece, Piraeus Bank Research

House price vs Income (Index, 2009=100)

Despite their decline, house prices have, in reality, become more expensive relative to households’

after-tax income, since 2010.

19

85

90

95

100

105

110

Q1/0

2

Q1/0

3

Q1/0

4

Q1/0

5

Q1/0

6

Q1/0

7

Q1/0

8

Q1/0

9

Q1/1

0

Q1/1

1

Q1/1

2

Q1/1

3

House price / Households Gross disposable Income per capita (index)

House price / GDP per capita (index)

September 2013

Public Investment Programme (mn €)

Source: MinFin, Piraeus Bank Research

PIP expenditure has failed to take off…

20 September 2013

400.0

500.0

600.0

700.0

800.0

900.0

1000.0

1100.0

Jan-0

6

Aug-0

6

Mar-

07

Oct

-07

May-0

8

Dec-

08

Jul-09

Feb-1

0

Sep-1

0

Apr-

11

Nov-1

1

Jun-1

2

Jan-1

3

Aug-1

3

Disbursements (12m moving average,flows)

Public Investment Programme (mn €)

Source: MinFin, Medium Term Fiscal Strategy 2013 -2016, Piraeus Bank Research

…and will remain at its 2013 level for the foreseeable future.

21 September 2013

0

2000

4000

6000

8000

10000

12000

Jan.

Jan.-

Feb.

Jan.-

Mar.

Jan.-

Apr.

Jan.-

May

Jan.-

Jun.

Jan.-

Jul.

Jan.-

Aug.

Jan.-

Sep.

Jan.-

Oct

.

Jan.-

Nov.

Jan.-

Dec.

2008 2009 2010

2011 2012 2013

Source: Bank of Greece, ELSTAT, Piraeus Bank Research

Turnover Index in Industry

(YoY% change)

The reorientation of the Greek economy towards a more export driven paradigm has began, but it will

be a long time until the transformation is complete. At the same time, the weak economic activity in

the EU bodes ill for further exports growth.

Balance of Payments – Travel Balance (mn €)

22

-60.0

-40.0

-20.0

0.0

20.0

40.0

60.0

80.0

Jan-0

6

May-0

6

Sep-0

6

Jan-0

7

May-0

7

Sep-0

7

Jan-0

8

May-0

8

Sep-0

8

Jan-0

9

May-0

9

Sep-0

9

Jan-1

0

May-1

0

Sep-1

0

Jan-1

1

May-1

1

Sep-1

1

Jan-1

2

May-1

2

Sep-1

2

Jan-1

3

May-1

3

domestic market non - domestic market

September 2013

-1000

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

Jan.

Jan.-

Feb.

Jan.-

Mar.

Jan.-

Apr.

Jan.-

May

Jan.-

Jun.

Jan.-

Jul.

Jan.-

Aug.

Jan.-

Sep.

Jan.-

Oct

.

Jan.-

Nov.

Jan.-

Dec.

2010 2011 2012 2013


Net Exports (mn €, current prices)

The decline in imports is the main driving force behind the improvement in the external sector.

23 September 2013

-6000

-4000

-2000

0

2000

4000

6000

8000

Q1/0

1

Q3/0

1

Q1/0

2

Q3/0

2

Q1/0

3

Q3/0

3

Q1/0

4

Q3/0

4

Q1/0

5

Q3/0

5

Q1/0

6

Q3/0

6

Q1/0

7

Q3/0

7

Q1/0

8

Q3/0

8

Q1/0

9

Q3/0

9

Q1/1

0

Q3/1

0

Q1/1

1

Q3/1

1

Q1/1

2

Q3/1

2

Q1/1

3

Exports (t - t(-4)) Imports, reversed sign, (t - t(-4)) Net exports (t - t(-4))


Economic Growth vs Unemployment rate

A 5% decline in the real GDP indicates a 4.5% increase in the unemployment rate.

24

y = -1.6129x + 2.3601R² = 0.711

-12.0

-10.0

-8.0

-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

8.0

10.0

-2.0 0.0 2.0 4.0 6.0 8.0

Re

al G

DP

(Y

oY

%)

Yearly change of Unemp. Rate

September 2013

A bird’s-eye view of the evolution of Greek debt

Source: Ameco Database, DG ECFIN: European Economy No.64/1997, IMF country report

No. 13/20, January 2013, Piraeus Bank Research Research

Driving Factors of Debt as % of GDP

From 2009 onwards, the evolution of the debt to GDP ratio has been driven by the snowball effect

caused by the negative dynamics of nominal GDP vs debt servicing costs. This trend has been

affected by the PSI and the Buy - Back.

25

-40.0

-30.0

-20.0

-10.0

0.0

10.0

20.0

30.0

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

Stock - flow adjustment "Snow-ball" effect Primary Balance (reverse sign) i.e: "+" is a deficit

" -" is a surplus

Δ (debt)

September 2013

26 September 2013

Source: European Commission, DG ECFIN, Piraeus Bank Research

Economic Climate Tracer

According to our mapping of the business cycle, the Greek business climate seems to be exiting the

contraction phase.

Economic Sentiment Indicator (1990-2012=100, sa)

27

60.0

70.0

80.0

90.0

100.0

110.0

120.0

Jan-0

6

Jun-0

6

Nov-0

6

Apr-

07

Sep-0

7

Feb-0

8

Jul-08

Dec-

08

May-0

9

Oct

-09

Mar-

10

Aug-1

0

Jan-1

1

Jun-1

1

Nov-1

1

Apr-

12

Sep-1

2

Feb-1

3

Jul-13

ESI, Greece ESI, EU-27 Average Level, Greece (2001-2012)-4.0

-3.0

-2.0

-1.0

0.0

1.0

2.0

-0.25 -0.2 -0.15 -0.1 -0.05 0 0.05 0.1 0.15

level

mom change

downswing expansion

contraction upswing

July '13

Jan '00

September 2013

Source: Hellenic Statistical Authority (ELSTAT), Bank of Greece, Teiresias, Bloomberg, Ministry of Finance, ECB, Eurostat,

Piraeus Bank Research

Average Real Interest Rate on New bank loans (<€1mn) to Non-financial corporations

(nominal rate minus change in HICP, %)

Greek Financial Distress Index

Our Financial Distress Index (FDSI), which reflects the conditions of liquidity and solvency not only of

the banking sector, but of the Greek economy as a whole (i.e. financing needs of the Greek

Government, current account deficit, credit bureau data and changes in loans and deposits), has

shown a remarkable retrenchment, mirroring the substantial decline in the “financial stress” of the

Greek economy.

28

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

Q1/0

9

Q2/0

9

Q3/0

9

Q4/0

9

Q1/1

0

Q2/1

0

Q3/1

0

Q4/1

0

Q1/1

1

Q2/1

1

Q3/1

1

Q4/1

1

Q1/1

2

Q2/1

2

Q3/1

2

Q4/1

2

Q1/1

3

Q2/1

3

Euroarea Greece

September 2013

-4.0

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

Jan-0

3

Jun-0

3

Nov-0

3

Apr-

04

Sep-0

4

Feb-0

5

Jul-05

Dec-

05

May-0

6

Oct

-06

Mar-

07

Aug-0

7

Jan-0

8

Jun-0

8

Nov-0

8

Apr-

09

Sep-0

9

Feb-1

0

Jul-10

Dec-

10

May-1

1

Oct

-11

Mar-

12

Aug-1

2

Jan-1

3

Jun-1

3

Source: ELSTAT, Eurostat, MINFIN,Piraeus Bank Research

Real GDP GDP (% change)

In Q2 2013 real GDP decreased by 3.8% y-o-y versus -6.4% y-o-y in Q2 2012. Consequently, during

the first half of 2013, the economy contracted by 4.7% on average, according to non-seasonally

adjusted data. In nominal terms, GDP shrunk by 6.65% in H1/13 (-6.1% in Q2’13).

According to our estimates for seasonally adjusted data, in Q2/13 real GDP contracted by 0.3% q-o-q.

29 September 2013

10.50

10.55

10.60

10.65

10.70

10.75

10.80

10.85

10.90

10.95

Q1/0

0

Q1/0

1

Q1/0

2

Q1/0

3

Q1/0

4

Q1/0

5

Q1/0

6

Q1/0

7

Q1/0

8

Q1/0

9

Q1/1

0

Q1/1

1

Q1/1

2

Q1/1

3

ln (GDP, nsa, mn€) ln (GDP, sa, mn €)

Note: Seasonally adjusted data according to PrB estimates

-10.0

-8.0

-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

8.0

10.0

Q1/0

1

Q1/0

2

Q1/0

3

Q1/0

4

Q1/0

5

Q1/0

6

Q1/0

7

Q1/0

8

Q1/0

9

Q1/1

0

Q1/1

1

Q1/1

2

Q1/1

3

GDP_sa_2005=100 (QoQ% change) GDP_sa_2005=100 (YoY% change)

GDP_nsa_2005=100 (YoY % change)

Note: Seasonally adjusted data according to PrB estimates

Source: Eurostat, ELSTAT, MinFin, Piraeus Bank Research

Economic Activity Indicators GDP estimate based on Economic

Activity Indicators

Indicators of Public and Private Economic Activity still remain at extreme negative levels but a marginal

pick–up is observed at the year-end.

30

-5

-4

-3

-2

-1

0

1

2

3

Q1/0

1

Q3/0

1

Q1/0

2

Q3/0

2

Q1/0

3

Q3/0

3

Q1/0

4

Q3/0

4

Q1/0

5

Q3/0

5

Q1/0

6

Q3/0

6

Q1/0

7

Q3/0

7

Q1/0

8

Q3/0

8

Q1/0

9

Q3/0

9

Q1/1

0

Q3/1

0

Q1/1

1

Q3/1

1

Q1/1

2

Q3/1

2

Q1/1

3

Private Activity Public Activity

-10

-8

-6

-4

-2

0

2

4

6

8

10

Q1/0

2

Q3/0

2

Q1/0

3

Q3/0

3

Q1/0

4

Q3/0

4

Q1/0

5

Q3/0

5

Q1/0

6

Q3/0

6

Q1/0

7

Q3/0

7

Q1/0

8

Q3/0

8

Q1/0

9

Q3/0

9

Q1/1

0

Q3/1

0

Q1/1

1

Q3/1

1

Q1/1

2

Q3/1

2

Q1/1

3

Actual Fitted

September 2013

Source: ELSTAT, Piraeus Bank Research Research

GDP (€ mn, constant prices)

Private Consumption

(€ mn, constant prices) Public Consumption


Gross Fixed Capital Formation


31

145,000

155,000

165,000

175,000

185,000

195,000

205,000

215,000

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

GDP

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

55,000

60,000

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Gross fixed capital formation

90,000

100,000

110,000

120,000

130,000

140,000

150,000

160,000

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Private Consumption

25,000

27,000

29,000

31,000

33,000

35,000

37,000

39,000

41,000

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Public Consumption

September 2013

Source: ELSTAT, Piraeus Bank Research Research


(€ mn, constant prices) Imports of goods and services


32

45000

50000

55000

60000

65000

70000

75000

80000

85000

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Imports of goods and services

30000

35000

40000

45000

50000

55000

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012


September 2013

Source: ELSTAT, European Commission, DG ECFIN, Piraeus Bank Research

Industrial confidence indicator (sa)

Industrial production

(YoY % change & level)

After five years of recession, industrial production

declined by a further 3.4% during 2012 (2011:

-7.8%). This result can be mainly ascribed to the

contraction in the manufacturing sector of 4.2%

(2011: -8.5%).

At the same time, confidence followed an upward

trend during the recent months but remains below

its long-term average.

33

65

75

85

95

105

115

125

Industrial Production Index (Level)

Average Level (2001-2012)Level

-15

-10

-5

0

5

10

Jan-0

6

Aug-0

6

Mar-

07

Oct

-07

May-0

8

Dec-

08

Jul-09

Feb-1

0

Sep-1

0

Apr-

11

Nov-1

1

Jun-1

2

Jan-1

3

YoY % change

% change

-40.0

-30.0

-20.0

-10.0

0.0

10.0

20.0

Jan-0

6

Jun-0

6

Nov-0

6

Apr-

07

Sep-0

7

Feb-0

8

Jul-08

Dec-

08

May-0

9

Oct

-09

Mar-

10

Aug-1

0

Jan-1

1

Jun-1

1

Nov-1

1

Apr-

12

Sep-1

2

Feb-1

3

Jul-13

Industrial Confidence indicator (sa, level) Average Level (2001-2012)

September 2013

Duration of production assured by current

order-book levels in Manufacturing Industry

(months, sa)

Level of Capacity Utilization in

Manufacturing Industry (%, sa)

Data collected in January, April, July and October each year


Both the level of capacity utilization and the duration of production assured by current order

books are below their respective long-term averages.

34

63.0

65.0

67.0

69.0

71.0

73.0

75.0

77.0

79.0

81.0

Q1/0

1

Q3/0

1

Q1/0

2

Q3/0

2

Q1/0

3

Q3/0

3

Q1/0

4

Q3/0

4

Q1/0

5

Q3/0

5

Q1/0

6

Q3/0

6

Q1/0

7

Q3/0

7

Q1/0

8

Q3/0

8

Q1/0

9

Q3/0

9

Q1/1

0

Q3/1

0

Q1/1

1

Q3/1

1

Q1/1

2

Q3/1

2

Q1/1

3

Q3/1

3

Current level of capacity utilization (%)

Average (2001 - 2012)

3.0

3.5

4.0

4.5

5.0

5.5

6.0

6.5

Q1/0

1

Q3/0

1

Q1/0

2

Q3/0

2

Q1/0

3

Q3/0

3

Q1/0

4

Q3/0

4

Q1/0

5

Q3/0

5

Q1/0

6

Q3/0

6

Q1/0

7

Q3/0

7

Q1/0

8

Q3/0

8

Q1/0

9

Q3/0

9

Q1/1

0

Q3/1

0

Q1/1

1

Q3/1

1

Q1/1

2

Q3/1

2

Q1/1

3

Q3/1

3

Duration of production assured by current order-book levels

Average (2001 - 2012)

September 2013

Source: European Commission, DG ECFIN, Eurostat, Piraeus Bank Research

Turnover Index in Services (excl. trade & auto)


Services confidence indicator (sa)

At current prices (turnover data) the

contraction of the Services sector’s output has

shown some signs of moderation.

Nevertheless, the sharp contraction during the

last 3 years has driven confidence to record

low levels. The index seems to rebound in

early-2013.

35

-60.0

-50.0

-40.0

-30.0

-20.0

-10.0

0.0

10.0

20.0

30.0

40.0

50.0

Jan-0

6

Jun-0

6

Nov-0

6

Apr-

07

Sep-0

7

Feb-0

8

Jul-08

Dec-

08

May-0

9

Oct

-09

Mar-

10

Aug-1

0

Jan-1

1

Jun-1

1

Nov-1

1

Apr-

12

Sep-1

2

Feb-1

3

Jul-13

Confidence indicator in Services (sa, level) Average Level (2001-2012)

50.0

70.0

90.0

110.0

130.0

150.0

170.0

Turnover Index in Services, excl. Trade & Auto (Level)

Average Level (2001-2012) Level

-30.0

-20.0

-10.0

0.0

10.0

20.0

Q1/0

1

Q1/0

2

Q1/0

3

Q1/0

4

Q1/0

5

Q1/0

6

Q1/0

7

Q1/0

8

Q1/0

9

Q1/1

0

Q1/1

1

Q1/1

2

Q1/1

3

YoY % change

% change

September 2013

Industrial companies assessment of order

book levels (sa, difference of % positive “ above

normal” –negative “below normal” answers)

Industrial companies expectations of exports* &

production**(sa, difference of % positive “will increase”

–negative “will decrease” answers)

Industrial companies are relying on external demand in order to maintain their sales and

production levels.


* Quarterly data, collected in January, April, July and October each year

** The respective monthly data are being used

36

-70

-60

-50

-40

-30

-20

-10

0

10

Jan-0

7

May-0

7

Sep-0

7

Jan-0

8

May-0

8

Sep-0

8

Jan-0

9

May-0

9

Sep-0

9

Jan-1

0

May-1

0

Sep-1

0

Jan-1

1

May-1

1

Sep-1

1

Jan-1

2

May-1

2

Sep-1

2

Jan-1

3

May-1

3

order-book levels

export order-book levels

-30

-20

-10

0

10

20

30

40

50

Q1/0

0

Q3/0

0

Q1/0

1

Q3/0

1

Q1/0

2

Q3/0

2

Q1/0

3

Q3/0

3

Q1/0

4

Q3/0

4

Q1/0

5

Q3/0

5

Q1/0

6

Q3/0

6

Q1/0

7

Q3/0

7

Q1/0

8

Q3/0

8

Q1/0

9

Q3/0

9

Q1/1

0

Q3/1

0

Q1/1

1

Q3/1

1

Q1/1

2

Q3/1

2

Q1/1

3

Q3/1

3

production expectation export expectation

September 2013


Turnover Index in Industry

(YoY% change) New Orders in Manufacturing

(YoY% change)

The reorientation of the Greek economy towards a more export driven paradigm has began, but it

will be a long time until the transformation is complete. At the same time, the weak economic

activity in the EU bodes ill for further exports growth.

37

-60.0

-40.0

-20.0

0.0

20.0

40.0

60.0

80.0

100.0

Jan-0

6

May-0

6

Sep-0

6

Jan-0

7

May-0

7

Sep-0

7

Jan-0

8

May-0

8

Sep-0

8

Jan-0

9

May-0

9

Sep-0

9

Jan-1

0

May-1

0

Sep-1

0

Jan-1

1

May-1

1

Sep-1

1

Jan-1

2

May-1

2

Sep-1

2

Jan-1

3

May-1

3


-60.0

-40.0

-20.0

0.0

20.0

40.0

60.0

80.0

Jan-0

6

May-0

6

Sep-0

6

Jan-0

7

May-0

7

Sep-0

7

Jan-0

8

May-0

8

Sep-0

8

Jan-0

9

May-0

9

Sep-0

9

Jan-1

0

May-1

0

Sep-1

0

Jan-1

1

May-1

1

Sep-1

1

Jan-1

2

May-1

2

Sep-1

2

Jan-1

3

May-1

3


September 2013


Trade of Goods Balance (excl. oil &

ships) & Services Balance (mn €)

Imports of goods vs GFCF Transport equipment,

Metal products & machinery

(YoY% change, constant prices 2005, nsa)

For the first time since 2000 (first available data), a surplus was recorded in the trade (excl. oil &

ships) and services balance during 2011 and this has shown further strength in 2012 and 2013

respectively. However, this is mainly a result of reduced imports, rather than increased exports.

Moreover, this recovery is partly due to the decline in investment activity.

38 September 2013

-6000

-4000

-2000

0

2000

4000

6000

8000

Jan.

Jan.-

Feb.

Jan.-

Mar.

Jan.-

Apr.

Jan.-

May

Jan.-

Jun.

Jan.-

Jul.

Jan.-

Aug.

Jan.-

Sep.

Jan.-

Oct

.

Jan.-

Nov.

Jan.-

Dec.

2010 2011 2012 2013

-30

-20

-10

0

10

20

30

40

50

Q1/0

1

Q3/0

1

Q1/0

2

Q3/0

2

Q1/0

3

Q3/0

3

Q1/0

4

Q3/0

4

Q1/0

5

Q3/0

5

Q1/0

6

Q3/0

6

Q1/0

7

Q3/0

7

Q1/0

8

Q3/0

8

Q1/0

9

Q3/0

9

Q1/1

0

Q3/1

0

Q1/1

1

Q3/1

1

Q1/1

2

Q3/1

2

Q1/1

3

GFCF Transport equipment, Metal products & machinery Imports of goods


Balance of Payments – Travel Balance (mn €)

Balance of Payments – Transportation Balance (mn €)

Positive expectations about tourism can lead to an improvement in the travel and transportation

balances from mid–2013 onwards.

39 September 2013

-1000

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

Jan.

Jan.-

Feb.

Jan.-

Mar.

Jan.-

Apr.

Jan.-

May

Jan.-

Jun.

Jan.-

Jul.

Jan.-

Aug.

Jan.-

Sep.

Jan.-

Oct

.

Jan.-

Nov.

Jan.-

Dec.

2010 2011 2012 2013

0

1000

2000

3000

4000

5000

6000

7000

8000

Jan.

Jan.-

Feb.

Jan.-

Mar.

Jan.-

Apr.

Jan.-

May

Jan.-

Jun.

Jan.-

Jul.

Jan.-

Aug.

Jan.-

Sep.

Jan.-

Oct

.

Jan.-

Nov.

Jan.-

Dec.

2010 2011 2012 2013


Current Account Decomposition (% of GDP) Current account balance (mn €)

The improvement in the current account deficit has been persistent and broad based (i.e.

improvement is recorded in all categories such as the trade, services, income and current

transfers balances).

40

-30.0

-25.0

-20.0

-15.0

-10.0

-5.0

0.0

5.0

10.0

15.0

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Current Transfers Income

Services Trade of Goods excl Oil & Ships

Ships Oil

September 2013

-25000

-20000

-15000

-10000

-5000

0

Jan.

Jan.-

Feb.

Jan.-

Mar.

Jan.-

Apr.

Jan.-

May

Jan.-

Jun.

Jan.-

Jul.

Jan.-

Aug.

Jan.-

Sep.

Jan.-

Oct

.

Jan.-

Nov.

Jan.-

Dec.

2010 2011 2012 2013

Building permits (YoY % change & level)

Construction confidence indicator (sa)

Source: European Commission, DG ECFIN, ELSTAT, Piraeus Bank Research

The construction sector has been one of the

hardest hit economic sectors. As a result, the

construction confidence indicator remains on

negative territory.

41

-90.0

-80.0

-70.0

-60.0

-50.0

-40.0

-30.0

-20.0

-10.0

0.0

10.0

20.0

Jan-0

6

Jun-0

6

Nov-0

6

Apr-

07

Sep-0

7

Feb-0

8

Jul-08

Dec-

08

May-0

9

Oct

-09

Mar-

10

Aug-1

0

Jan-1

1

Jun-1

1

Nov-1

1

Apr-

12

Sep-1

2

Feb-1

3

Jul-13

Confidence indicator in Construction (sa, level) Average Level (2001-2012)

0

2000

4000

6000

8000

10000

Building Permits (Total, number - Level)Average Level (2001-2012)

Level

-80

-60

-40

-20

0

20

40

60

Jan-0

6

Jul-06

Jan-0

7

Jul-07

Jan-0

8

Jul-08

Jan-0

9

Jul-09

Jan-1

0

Jul-10

Jan-1

1

Jul-11

Jan-1

2

Jul-12

Jan-1

3

YoY % change

% change

September 2013

Public Investment Programme (flows, mn €)

Source: MinFin, ELSTAT, Piraeus Bank Research

Production Index in Construction (level, 2005=100)

The decline in both residential construction and infrastructure investment has pushed the

Production in Construction index to very low levels. The drop in the Civil Engineering Index

primarily reflects the under-performance of the Public Investment Programme.

42

0

50

100

150

200

250

300

350

Q1/0

0

Q1/0

1

Q1/0

2

Q1/0

3

Q1/0

4

Q1/0

5

Q1/0

6

Q1/0

7

Q1/0

8

Q1/0

9

Q1/1

0

Q1/1

1

Q1/1

2

Q1/1

3

Production Index in Construction Production Index of Building Construction

Production Index of Civil Engineering

September 2013

400.0

500.0

600.0

700.0

800.0

900.0

1000.0

1100.0

Jan-0

6

Aug-0

6

Mar-

07

Oct

-07

May-0

8

Dec-0

8

Jul-09

Feb-1

0

Sep-1

0

Apr-

11

Nov-1

1

Jun-1

2

Jan-1

3

Aug-1

3

Disbursements (12m moving average,flows)

Source: European Commission, DG ECFIN, ELSTAT, Piraeus Bank Research

Retail trade excl. automotive fuels (volume, YoY % change & level)

Retail trade confidence indicator (sa)

Higher indirect taxes, declines in disposable

income and high unemployment have pushed

consumption and retail trade to record lows. Up

to a point, such a shift away from consumption

is desirable as part of the reorientation of the

Greek economy.

43

-60.0

-50.0

-40.0

-30.0

-20.0

-10.0

0.0

10.0

20.0

30.0

40.0

50.0

Jan-0

6

Jun-0

6

Nov-0

6

Apr-

07

Sep-0

7

Feb-0

8

Jul-08

Dec-

08

May-0

9

Oct

-09

Mar-

10

Aug-1

0

Jan-1

1

Jun-1

1

Nov-1

1

Apr-

12

Sep-1

2

Feb-1

3

Jul-13

Confidence indicator in Retail Trade (sa, level) Average Level (2001-2012)

60.0

70.0

80.0

90.0

100.0

110.0

120.0

130.0

140.0

Volume Index in Retail Sales, excl. automotive fuels (Level)


-30.0

-20.0

-10.0

0.0

10.0

20.0

Jan-0

6

Aug-0

6

Mar-

07

Oct

-07

May-0

8

Dec-

08

Jul-09

Feb-1

0

Sep-1

0

Apr-

11

Nov-1

1

Jun-1

2

Jan-1

3

YoY % change

% change

September 2013


Wholesale trade has been severely hit by the

economic crisis. Also car sales are running well

below their long-term average.

Turnover index in Wholesale trade (YoY % change & level)

Car registrations (number of cars)

44

60.0

70.0

80.0

90.0

100.0

110.0

120.0

130.0

140.0

150.0

160.0

Turnover Index in Wholesale Trade (Level)


-25.0

-20.0

-15.0

-10.0

-5.0

0.0

5.0

10.0

15.0

Q1/0

1

Q1/0

2

Q1/0

3

Q1/0

4

Q1/0

5

Q1/0

6

Q1/0

7

Q1/0

8

Q1/0

9

Q1/1

0

Q1/1

1

Q1/1

2

Q1/1

3

YoY % change

% change

0

5000

10000

15000

20000

25000

30000

35000

40000

45000

50000

Jan-0

6

Jun-0

6

Nov-0

6

Apr-

07

Sep-0

7

Feb-0

8

Jul-08

Dec-

08

May-0

9

Oct

-09

Mar-

10

Aug-1

0

Jan-1

1

Jun-1

1

Nov-1

1

Apr-

12

Sep-1

2

Feb-1

3

Jul-13

car registrations Average number (2005-2012)

September 2013

Consumer Survey Indicators (sa)

After the up-tick which is traditionally recorded during election periods, consumer confidence

remains subdued, although it seems to rebound in early-2013.

Source: European Commission, DG ECFIN, Piraeus Bank Research 45

-90.0

-80.0

-70.0

-60.0

-50.0

-40.0

-30.0

-20.0

-10.0

0.0

Jan-0

6

Jun-0

6

Nov-0

6

Apr-

07

Sep-0

7

Feb-0

8

Jul-08

Dec-

08

May-0

9

Oct

-09

Mar-

10

Aug-1

0

Jan-1

1

Jun-1

1

Nov-1

1

Apr-

12

Sep-1

2

Feb-1

3

Jul-13

Consumer Confidence Indicator Average Level (2001-2012)

-100

-80

-60

-40

-20

0

20

40

60

80

100

Jan-0

6

Jun-0

6

Nov-0

6

Apr-

07

Sep-0

7

Feb-0

8

Jul-08

Dec-

08

May-0

9

Oct

-09

Mar-

10

Aug-1

0

Jan-1

1

Jun-1

1

Nov-1

1

Apr-

12

Sep-1

2

Feb-1

3

Jul-13

Household Financial Situation next 12mEconomic Situation next 12mUnemployment next 12mSavings next 12m

September 2013

Source: ELSTAT, European Commission DG ECFIN, Piraeus Bank Research

Hiring Intentions

(normalized data, sa, 3m moving average)

Employment


Employment continues to decline (-6.3% in Q1/13), while hiring intentions, an index we created

using the Business & Consumer Survey’s employment related questions, remains negative.

46

3500.0

3700.0

3900.0

4100.0

4300.0

4500.0

4700.0

-10.0

-8.0

-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

Q1/0

1

Q1/0

2

Q1/0

3

Q1/0

4

Q1/0

5

Q1/0

6

Q1/0

7

Q1/0

8

Q1/0

9

Q1/1

0

Q1/1

1

Q1/1

2

Q1/1

3

Employed, in thousands (RHS) YoY % change (LHS) average level (2001-2012), RHS

-2.5

-2.0

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

Jan-0

2

Jul-02

Jan-0

3

Jul-03

Jan-0

4

Jul-04

Jan-0

5

Jul-05

Jan-0

6

Jul-06

Jan-0

7

Jul-07

Jan-0

8

Jul-08

Jan-0

9

Jul-09

Jan-1

0

Jul-10

Jan-1

1

Jul-11

Jan-1

2

Jul-12

Jan-1

3

Jul-13

September 2013

Primary Sector: Agriculture, forestry and fishing. Secondary Sector: Mining and quarrying, Manufacturing, Electricity, gas,

steam and air conditioning supply, Water supply; sewerage, waste management and remediation activities. Other

Services: Financial and insurance activities, Real estate activities, Professional, scientific and technical activities, Public

administration and defense, compulsory social security. Other Sectors: Other service activities, Activities of households as

employers, Activities of extraterritorial organizations and bodies.


Yearly change of employed (thousands)

47

-500.0

-400.0

-300.0

-200.0

-100.0

0.0

100.0

200.0

Q1/0

1

Q2/0

1

Q3/0

1

Q4/0

1

Q1/0

2

Q2/0

2

Q3/0

2

Q4/0

2

Q1/0

3

Q2/0

3

Q3/0

3

Q4/0

3

Q1/0

4

Q2/0

4

Q3/0

4

Q4/0

4

Q1/0

5

Q2/0

5

Q3/0

5

Q4/0

5

Q1/0

6

Q2/0

6

Q3/0

6

Q4/0

6

Q1/0

7

Q2/0

7

Q3/0

7

Q4/0

7

Q1/0

8

Q2/0

8

Q3/0

8

Q4/0

8

Q1/0

9

Q2/0

9

Q3/0

9

Q4/0

9

Q1/1

0

Q2/1

0

Q3/1

0

Q4/1

0

Q1/1

1

Q2/1

1

Q3/1

1

Q4/1

1

Q1/1

2

Q2/1

2

Q3/1

2

Q4/1

2

Q1/1

3

Primary sector Secondary sector

Wholesale and retail trade; repair of motor vehicles and motorcycles Accommodation and food service activities

Transportation and storage, Information and communication Other Services

Education Human health and social work activities

Other Sectors Total

September 2013


Unemployment rate

The unemployment rate climbed to 26.0% in Q4/12 (non-sa data) due to the sustained downward

trend in payrolls, driving the annual unemployment rate to 24.2% of the labour force. In Q1/13, the

rate increased further to 27.4%.

According to monthly non-seasonally adjusted data, the unemployment rate in May 2013 reached

27.5% from 22.9% in May 2012. Based on seasonally adjusted data the unemployment rate in May

was 27.6% compared to 23.8% in May 2012 and 27% in April 2013.

48

11.4 10.810.3

9.7 10.5 9.9 8.9 8.3

7.6

9.5

12.5

17.7

24.2

5.0

10.0

15.0

20.0

25.0

30.0

Q1/0

0

Q1/0

1

Q1/0

2

Q1/0

3

Q1/0

4

Q1/0

5

Q1/0

6

Q1/0

7

Q1/0

8

Q1/0

9

Q1/1

0

Q1/1

1

Q1/1

2

Q1/1

3

Quarterly Data Yearly Data

5.0

10.0

15.0

20.0

25.0

30.0

Jan-0

6

May-0

6

Sep-0

6

Jan-0

7

May-0

7

Sep-0

7

Jan-0

8

May-0

8

Sep-0

8

Jan-0

9

May-0

9

Sep-0

9

Jan-1

0

May-1

0

Sep-1

0

Jan-1

1

May-1

1

Sep-1

1

Jan-1

2

May-1

2

Sep-1

2

Jan-1

3

May-1

3

Unemployment Rate, (sa) Unemployment rate (nsa)

September 2013


Unemployed by duration of unemployment (% of total)

49

In Q1/13, the percentage of the “long-term” unemployed -that is the percentage of people that have

been looking for a job for more than 1 year- reached 65.6% from circa 44.6% at Q1/10.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Q1/0

1

Q3/0

1

Q1/0

2

Q3/0

2

Q1/0

3

Q3/0

3

Q1/0

4

Q3/0

4

Q1/0

5

Q3/0

5

Q1/0

6

Q3/0

6

Q1/0

7

Q3/0

7

Q1/0

8

Q3/0

8

Q1/0

9

Q3/0

9

Q1/1

0

Q3/1

0

Q1/1

1

Q3/1

1

Q1/1

2

Q3/1

2

Q1/1

3

Less than a month 1 - 2 m 3 - 5 m 6 - 11 m >12 m

September 2013

Source: ELSTAT, Eurostat, Piraeus Bank Research

Contribution of CPI sub-indicators

to inflation Effect of tax changes

Inflation can be attributed to the spike in indirect taxes. Stripping out the effect of taxes, prices seem

to have stabilized as inflation, based on HICP at constant taxes, reached 0.1% in 2012 (2011: 1.2%).

In August 2013, inflation was in negative territory, to -1.3%, due to a decline in the prices of goods

and services and weaker increases in energy prices.

50 September 2013

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0

Jan-0

8

Jul-08

Jan-0

9

Jul-09

Jan-1

0

Jul-10

Jan-1

1

Jul-11

Jan-1

2

Jul-12

Jan-1

3

Jul-13

contribution of CPI Energycontribution of CPI Services (excl. electricity)contribution of CPI Goods (excl. fuels)Headline Inflation

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

Jan-0

8

Apr-

08

Jul-08

Oct

-08

Jan-0

9

Apr-

09

Jul-09

Oct

-09

Jan-1

0

Apr-

10

Jul-10

Oct

-10

Jan-1

1

Apr-

11

Jul-11

Oct

-11

Jan-1

2

Apr-

12

Jul-12

Oct

-12

Jan-1

3

Apr-

13

Jul-13

HICP constand tax (YoY % change) Effect of tax changes

HICP (YoY % change)

According to the 2013 Budget, the general government deficit is expected to fall to €9.4 bn from

€12.9 bn in 2012. Achieving this goal depends on the SSFs’ balance and more precisely on achieving

a surplus of €2.7 bn against a deficit of €2.2 bn in 2012.

Other key points in the 2013 Budget are:

• The ordinary budget deficit is estimated to stand at €9.5 bn (2012: €14.1 bn) through reduced

expenditures, while the PIP will produce a deficit of €1.7 bn (2012: €2.2 bn) due to revenue

growth. Hence, the budget deficit is estimated to total €11.2 bn versus €16.3 bn in 2012.

However, if we take into account the national accounts deficit adjustments, a bigger deficit than in

2012 is ultimately created (€14 bn from €13.4 bn in 2012).

• The surplus of Government Bodies other than Public Utilities is reduced to €738 mn.

• Similarly, the Public Utilities surplus is narrowed to €496 mn.

• The surplus in Local Governments stands at €589 mn.

51 September 2013

(1)Included expenditures amounting to €116.05 mn of PIP, disbursed through the Ordinary Budget. Not

included PIP expenditures amounting to €116.05 mn of PIP, Bugdet. Not included PIP expenditures

amounting to €48.5 mn for which not payment order was issued in 2011.

Source: MinFin, Budget 2012, Oct.12', Piraeus Bank Research

2011 2012 2013

mn € RealisationEstimate of

realisationProjections

Α =Ι-ΙΙ Ordinary budget balance -19986 -14149 -9480

Ι Net revenues of ordinary budget 50159 47706 46322

ΙΙ Expenditures of the ordinary budget 70145 61855 55802

Β = Ι-ΙΙ PIP balance -2786 -2163 -1714

Ι Revenues 3773 4687 5136

ΙΙ Expenditures (1) 6559 6850 6850

C = Α+Β State budget balance -22773 -16312 -11194

a Central Govenrment Adjustments (1+2) 2318 2925 -2792

1 Central Govenrment Adjustments - Revenues 1277 1029 -1784

2 Central Govenrment Adjustments - Expenditures 1041 1896 -1008

D = C+a Total Balance (ESA-95) -20455 -13386 -13986

Ε. Balance of govenrment bodies other than Public Utilities 646 1300 738

F. Public Utilities balance - reclassified inside the General 975 871 496

G. (i + ii) Local Governments 521 556 589

i LGs balance 422 145 439

ii Adjustments on LGs balance 99 411 150

H. (i+ii) SSFs balance (ESA-95) -1373 -2223 2721

i SSFs balance -986 -953 3178

ii Adjustments on SSFs balance -387 -1270 -457

I. =

D+Ε+F+G+ΗGeneral Government balance (ΕSA-95) -19686 -12882 -9442

(% of GDP) -9.4% -6.6% -5.2%

J. General Government Interest payments 14901 10486 10189

(% of GDP) 7.1% 5.4% 5.6%

I+J. Primary balance of the general government (ΕSA-95) -4785 -2396 748

(% of GDP) -2.3% -1.2% 0.4%

GDP 208532 194003 183049

General Government Balance (ESA 1995)

52 September 2013

53

1/ Targets as included in the revised Medium Term Fiscal Strategy 2013-2016. 2/ Total State Budget expenditures and revenues outcomes for 2012 are provisional and will be confirmed following the Parliament ratification of the annual budget outcome review for 2012. 3/ The annual estimates are formed after the last review of the Greek economy and figures are included in the revised Medium Term Fiscal Strategy 2013-2016. 4/ Targets as included in the Executive Summary of the Budget for 2013. 5/ €1.5bn stemming from the transfer of future income from the Greek Government bonds holdings of National Central Banks of the Eurosystem (Securities Market Programme-SMPs) is included. It is noted that these revenues had not been taken into account in the 2013 State Budget, because they are stemming from the European Council decision of 26 and 27 November 2012, which came after State Budget was voted in the Hellenic Parliament. Source: Ministry of Finance, Piraeus Bank Research

September 2013

2012 2013 2012

Jan.-August Jan.-AugustTarget 1/

ΜTFSDifference Outcome 2/ Estimates 3/

MTFS 2013-2016

Target 4/

Budget 2013

Ordinary Budget (1) (2) (2-1) (3) (2-3) (4) (5) (6)

Net revenue 30,639 30,964 325 29,807 1,157 48,325 46,727 46,322

Revenues before tax refunds 5/ 33,036 32,027 -1,009 31,564 463 51,482 49,542 49,137

Special revenue from licensing public rights 0 65 65 54 11 15 86 86

Tax refunds 2,397 1,128 -1,269 1,811 -683 3,172 2,901 2,901

Expenditures 42,971 34,840 -8,131 36,970 -2,130 61,499 53,457 55,802

Primary expenditure 31,276 28,436 -2,840 30,376 -1,940 47,529 45,150 45,050

Military procurement (on a cash basis) 188 173 -15 269 -96 410 750 750

Guarantees called 437 743 306 875 -131 796 1,027 1,027

to bodies classified inside the General Government

(net basis)384 441 57 471 -30 680 558 558

to bodies classified outside the General Government 53 302 249 404 -102 117 469 469

Net interest payments 11,070 5,363 -5,707 5,337 26 12,224 6,400 8,900

Loan disbursement fee to EFSF 0 124 124 113 11 541 130 75

Ordinary Budget balance -12,332 -3,876 8,456 -7,163 3,287 -13,174 -6,730 -9,480

PIP

Revenue 2,463 3,980 1,517 3,180 800 3,601 5,136 5,136

Expenditures 2,615 2,544 -71 3,850 -1,306 6,114 6,850 6,850

PIP Balance -152 1,436 1,588 -670 2,106 -2,513 -1,714 -1,714

0 0 0 0 0 0 0 0

State Budget Balance -12,484 -2,441 10,043 -7,833 5,392 -15,688 -8,444 -11,194

State Budget Primary Balance -1,414 2,922 4,336 -2,496 5,418 -3,465 -2,044 -2,294

2013 Budget

million € Difference

Jan.-August 2013 2013


Total Deposits & Repos excl. GG (€ mn) Total Loans & Corporate Bonds excl. GG

(€ mn)

After a peak-to-trough decline of 105.5 bn, deposits (excl. General Government) had recovered to

€179 bn by end-2012 and -according to the latest data- reached €176.2 bn in July 2013.

After peaking at €272 bn in May 2010, loans had declined to €233 bn by December 2012. In July

2013 loans reached €227.2 bn.

54 September 2013

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

Jan-0

1

Jun-0

1

Nov-0

1

Apr-

02

Sep-0

2

Feb-0

3

Jul-03

Dec-

03

May-0

4

Oct

-04

Mar-

05

Aug-0

5

Jan-0

6

Jun-0

6

Nov-0

6

Apr-

07

Sep-0

7

Feb-0

8

Jul-08

Dec-

08

May-0

9

Oct

-09

Mar-

10

Aug-1

0

Jan-1

1

Jun-1

1

Nov-1

1

Apr-

12

Sep-1

2

Feb-1

3

Jul-13

Category 1: Liabilities associated with assets disposed of in a securitization

Deposits and Repos from EA & other countries' residents excl. categ. 1

Deposits and Repos from Households & Companies (Domestic)

40,000

80,000

120,000

160,000

200,000

240,000

280,000

Jan-0

1

Jun-0

1

Nov-0

1

Apr-

02

Sep-0

2

Feb-0

3

Jul-03

Dec-

03

May-0

4

Oct

-04

Mar-

05

Aug-0

5

Jan-0

6

Jun-0

6

Nov-0

6

Apr-

07

Sep-0

7

Feb-0

8

Jul-08

Dec-

08

May-0

9

Oct

-09

Mar-

10

Aug-1

0

Jan-1

1

Jun-1

1

Nov-1

1

Apr-

12

Sep-1

2

Feb-1

3

Jul-13

Loans to Rest of the world Domestic Loans & Bonds, incl. securit


Deposits & Loans, Domestic Private Sector

(stock, € mn )

Net Position with General Government*

(Assets – Deposits, € mn)

Greece experienced strong loan and deposit growth between 2000-2008. Since the beginning of the

crisis, the gap between the two has continued to grow.

Moreover, both lending to the General Government and Government bond holdings increased

substantially between end-2010 and 2011 to €60 bn, crowding out the private sector.

* In August 2011 domestic credit institutions registered a reduction in the value of their portfolio of Greek Government securities amounting to EUR 4 billion because of their

participation in the securities exchange programme agreed by the EU Summit of 21st July 2011.In January 2012 credit institutions registered a further reduction in the value of this

portfolio amounting to EUR 5.8 billion, in March 2012 a reduction of EUR 15.2 billion and in April 2012 a reduction of EUR 4.1 billion.

55 September 2013

0

50000

100000

150000

200000

250000

300000

Q1/0

1

Q1/0

2

Q1/0

3

Q1/0

4

Q1/0

5

Q1/0

6

Q1/0

7

Q1/0

8

Q1/0

9

Q1/1

0

Q1/1

1

Q1/1

2

Q1/1

3

Deposits (Domestic Corporations and Households, stock)

Loans (Domestic, Corporations and Households, stock)

-5,000

5,000

15,000

25,000

35,000

45,000

55,000

Jan-0

1Ju

n-0

1N

ov-0

1Apr-

02

Sep-0

2Feb-0

3Ju

l-03

Dec-

03

May-0

4O

ct-0

4M

ar-

05

Aug-0

5Ja

n-0

6Ju

n-0

6N

ov-0

6Apr-

07

Sep-0

7Feb-0

8Ju

l-08

Dec-

08

May-0

9O

ct-0

9M

ar-

10

Aug-1

0Ja

n-1

1Ju

n-1

1N

ov-1

1Apr-

12

Sep-1

2Feb-1

3Ju

l-13


Funding Gap in Domestic Private Sector (mn €)

Note: Funding Gap in Domestic Private Sector is calculated as the difference between the net flows of Loans minus the flows of Deposits & repos during the period. Net flows of Loans are derived from changes in outstanding amounts corrected for reclassifications, loan write-offs and exchange rate variations. Flows of Deposits & repos are derived from changes in outstanding amounts corrected for foreign exchange valuations and reclassification adjustments.

Given the strong domestic credit growth and Greece’s economic expansion in the SEE area, the Greek

banking sector has developed a funding gap.

This gap between the sources and uses of funds has been exacerbated by the recent capital flight.

However, the positive net flow of deposits at year-end led to a favourable outcome. The gap narrowed

even further during the second quarter of 2013.

56 September 2013

-15000

-10000

-5000

0

5000

10000

15000

Q1/0

1

Q1/0

2

Q1/0

3

Q1/0

4

Q1/0

5

Q1/0

6

Q1/0

7

Q1/0

8

Q1/0

9

Q1/1

0

Q1/1

1

Q1/1

2

Q1/1

3

Loans-Deposits (flows)

-20000

0

20000

40000

60000

80000

100000

120000

140000

160000

Q1/0

1

Q4/0

1

Q3/0

2

Q2/0

3

Q1/0

4

Q4/0

4

Q3/0

5

Q2/0

6

Q1/0

7

Q4/0

7

Q3/0

8

Q2/0

9

Q1/1

0

Q4/1

0

Q3/1

1

Q2/1

2

Q1/1

3

Loans-Deposits (cumulative)


Liabilities to the Eurosystem (mn. €)

Given the practical difficulties related to reducing the stock of loans and the detrimental impact that

this massive deleveraging would have on economic activity, Greek banks had no option but to

substitute the lost deposits with Eurosystem funding. As a result, liabilities to the Eurosystem have

increased from €4 bn in Jan 2008 to €132 bn in August 2012. An outlier was recorded in February

2012 (€158 bn), due to the PSI procedure.

The positive flow of deposits at year–end facilitates the decline of the banking sector’s reliance on

Eurosystem funding.

57 September 2013

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

Jan-0

1

Aug-0

1

Mar-

02

Oct

-02

May-0

3

Dec-

03

Jul-04

Feb-0

5

Sep-0

5

Apr-

06

Nov-0

6

Jun-0

7

Jan-0

8

Aug-0

8

Mar-

09

Oct

-09

May-1

0

Dec-

10

Jul-11

Feb-1

2

Sep-1

2

Apr-

13


Non-performing Loans (% of total loans)

Despite increases in provisions for non-performing loans, Greek banks have managed to

increase their capital and reserve levels throughout the crisis period.

Nevertheless their participation in the PSI process resulted in substantial losses for the Greek

banking system.

Capital and reserves, (decomposition, mn. €)

58

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

Q1 2

005

H1 2

005

9M

2005

2005

Q1 2

006

H1 2

006

9M

2006

2006

Q1 2

007

H1 2

007

9M

2007

2007

Q1 2

008

H1 2

008

9M

2008

2008

Q1 2

009

H1 2

009

9M

2009

2009

Q1 2

010

Η1 2

010

9M

2010

2010

Q1 2

011

Η1 2

011

9M

2011

2011

Q1 2

012

H1 2

012

9M

2012

2012

Consumer Corporate loans Mortgage Loans Total Loans

September 2013

-40,000

-30,000

-20,000

-10,000

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

Jan-0

1

Jun-0

1

Nov-0

1

Apr-

02

Sep-0

2

Feb-0

3

Jul-03

Dec-

03

May-0

4

Oct

-04

Mar-

05

Aug-0

5

Jan-0

6

Jun-0

6

Nov-0

6

Apr-

07

Sep-0

7

Feb-0

8

Jul-08

Dec-

08

May-0

9

Oct

-09

Mar-

10

Aug-1

0

Jan-1

1

Jun-1

1

Nov-1

1

Apr-

12

Sep-1

2

Feb-1

3

Jul-13

Provisions for bad loans

Capital and reserves

Capital and reserves excl. provisions for bad loans


Sources of Funding (mn €)

One issue that we have touched upon only briefly is that of the role of the Balance of Payments in the

evolution of deposits in particular and liquidity in general.

Whether a CA deficit affects the liquidity conditions in an economy depends mainly on the way it is financed.

Up until 2009, Greece serviced its financing needs by issuing (government & corporate) bonds and wholesale

deposits. That is “good quality” liquidity that banks could use to grant new loans to Greek residents, create

deposits, and so on.

Since the onset of the crisis, we have seen a massive reduction in this “good” liquidity, which has been

replaced by official lending from the “troika” loans as well as by some repatriation of intra-group corporate

loans from foreign subsidiaries.

59

-80,000

-60,000

-40,000

-20,000

0

20,000

40,000

60,000

80,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Non-residents' Deposits & Repos with resident MFI

Non-residents' net investment in Bonds & Notes issued by residents

-100,000

-50,000

0

50,000

100,000

150,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Residents' net investment in Bond & Notes issued by non-residents

Residents' Deposits & Repos with non-resident MFI

Loans granted by non-residents to residentsSeptember 2013

Disclaimer: This note constitute an investment advertisement, is intended solely for information purposes and it cannot in any way be considered investment advice, offer or recommendation to enter into any transaction. The information included in this note may not be construed as suitable investment for the holder, nor may it be considered as an instrument to accomplish specific investment goals or relevant financial needs of the holder and may neither be reckoned as a substitute to relevant contractual agreements between the Bank and the holder. Before entering into any transaction each individual investor should evaluate the information contained in this note and not base his/her decision solely on the information provided. This note cannot be considered investment research and consequently it was not compiled by Piraeus Bank according to the requirements of the law that are intended to ensure independence in the sector of investment research. Information comprised in this note is based on publically available sources that are considered to be reliable. Piraeus Bank cannot be held accountable for the accuracy or completeness of the information contained in this note. Views and estimates brought forward in this note represent domestic and international market trends on the date indicated in the note and they are subject to alteration without previous warning. Piraeus Bank may also include in this note investment research done by third parties. This information is not modified in any way, consequently the Bank cannot be held accountable for the content. The Piraeus Bank Group is and organization with a considerable domestic and international presence, and provides a great variety of investment services. In cases where conflicts of interest issues should arise while Piraeus Bank or the rest of the companies of the group provide investment services in relation to the information provided in this note, Piraeus Bank and the companies of the Group should be underlined that (the list is not exhaustive): a) No restrictions apply in dealing for own account, or with regards to trading in relation to portfolios managed by Piraeus Bank or companies of its group before the publication of this note, or with regards to trading before an initial public offer. b) It is possible that investment or additional services are provided to the issuers included in this note against a fee. c) It is possible that Bank or any of its subsidiaries participate in the share capital of any of the issuers included in this note or may attract other interests financial or not from them. d) The Bank or any of its subsidiaries may act a market maker or an underwriter for any of the issuers included in the note. e) Piraeus Bank may have issued similar notes with different or incompatible content with the content of this note. It should be explicitly noted that: a) Figures refer to past performances and past performances do not constitute a safe indication for future performances. b) Figures constitute simulation of past performances and they are not a safe indication of future performances. c) Any projections or other estimates are not safe indications for future performances. d) Taxation treatment of information provided in this note may differ according to the rules that govern each individual investor. Therefore the holder should seek independent advice in relation to taxation rules that may affect him/her. e) Piraeus Bank is not under any obligation to keep data and information provided herein updated.

60 September 2013

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