I believe that the improvement of the climate in the Greek economy will pave the way for the further increase of investment inflows to the Balkans in the near future
Constantine Michalos has been the Executive Director of the Athens Chamber of Commerce and Industry since 2006. He is also the Director of the Central Union of the Chambers of the Greece, the Vice President of Eurochambres, and President and CEO. of the shipping company SWAN SA. He is a leading contributor to the reform in the economy and the work of producers and entrepreneurs.
How would you rate the overall economic situation in Greece and how much have the austerity measures helped or hindered economic recovery?
-It is a fact that, following a huge effort, Greece has managed to restore its fiscal balance and redress major structural problems. Despite the inevitable impact this effort had on growth, the recent signs regarding the course of the Greek economy are rather encouraging. Within 2019 we have seen a drastic reduction of Greek government bond yields that reflects an increase in market confidence, as well as the complete lifting of capital controls. Moreover, major steps are being made since this summer for adopting a fiscal policy mix that is more growth-friendly. The draft budget for 2020 encompassed a series of important relief measures for businesses, such as the reduction of the corporate tax rate from 28% to 24%, the reduction of the dividend rate from 10% to 5%, as well as measures designed to support key sectors of the economy, such as construction, the most important being the suspension of VAT on all building permits issued since 2006. A positive impact on entrepreneurship and growth is also expected from the enactment of a new Development Law, which contains provisions that upgrade the in-vestment and business environment, tackling existing obstacles and providing new incentives and facilities. All these developments have significantly improved market sentiment and create better conditions for achieving the greater goal, which is to boost growth and restore the citizens’ living standards.
Based on you experience, how do you see the current economic situation in the EU, the ramifications of Brexit, and the consequences for the Greek economy?
– Recently, not only the European, but also the global economy, are faced with the consequences of rising uncertainty. The international trade system is tested by the accumulation of the effects from the tariff war between the US and China and other major trading partners, resulting in the continuous slowdown of the global economy. As regards the eurozone in particular, in the past few months we have seen the downward revision of growth forecasts for 2020, owing to trade tensions and the problems arising in major manufacturing sectors, as well as to the persistent uncertainty regarding Brexit and the conditions that will prevail immediately after its occurrence. Brexit is also a matter of concern for Greece, given the strong, heretofore, commercial bonds between the two countries. The volume of bilateral trade in goods volume is currently close to 2.3 billion euros, with Greek exports amounting to 1.2 billion euros in 2018. Therefore, the commercial policy chosen by the United Kingdom following its exit from the EU is crucial for the future trade relations between the two countries. In addition, a possible strengthening of the euro against the pound could hurt the competitiveness of Greek exports of goods and services to the UK.
How much did this situation impact on Greek companies in terms of their decisions to invest abroad, and especially in the Balkans?
– Despite the ten-year crisis, Greece continues to be a major investor in the Balkans. Greek enterprises continue to realise or plan major investments in Balkan countries and are key players in these economies, actively contributing to growth and employment. In Serbia, in particular, total Greek investment stood at 1.5 billion euros in 2018, with almost 150 businesses operating in the country, in sectors such as construction, food and beverages, retail trade, telecommunications and information technology, hotel services, etc. I believe that the improvement of the climate in the Greek economy will pave the way for the further increase of investment inflows to the Balkans in the near future.
How would you rate overall trade relations between Greece and Serbia?
– Trade relations between Greece and Serbia are already very good. In 2018, bi-lateral trade volumes stood at a record high, almost reaching 500 million euros. Serbian exports to our country amounted to 178 million euros, the most important being industrial products, food, chemicals, machinery, paper, etc. Correspondingly, Greek exports to Serbia stood at 306 million euros, increased by 7% year-on-year. The most important exports to Serbia are industrial products, food and live animals, chemicals, machinery, minerals, and lubricants. Tourist relations are equally good, as Greece was visited by 1.2 Serbian tourists last year.
Which segments of economic cooperation could be further improved?
– I believe there is room for the further deepening and expansion of economic relations between Greece and Serbia. As regards investment, Serbia has major opportunities to show in sectors such as energy and, in particular, RES, agriculture, chemicals and fertilisers, irrigation systems, mineral ores, as well as construction. There is also potential for new, mutually beneficial trade partnerships in the food sector –especially in regard to products such as olives and olive oil, herbs and spices, bakery and confectionery products, fish, fruit and vegetables– as well as in the construction materials sector, in pharmaceuticals, technology products, as well as electrical and professional equipment.
How satisfied are Greek companies already operating in Serbia when it comes to the business climate and opportunities for expansion here?
– Serbia is a country that offers significant advantages for investment, such as strong growth, the existence of a competent skilled workforce, a favourable tax regime, low currency risk, and a beneficial investment framework. This is why it has been an attractive destination for Greek enterprises. That said, there are also difficulties, mostly having to do with red tape and delays in the issuance of permits, as well as frequent changes in the legislation. It is my understanding that all these issues are at the core of the relevant reform effort in Serbia, as they are in Greece. In any case, the overall picture and experience is positive, and conducive to the further strengthening of business partnerships in the future.