Greece MacroView June 28 2016

NATIONAL BANK OF GREECE | Greece: Macro View | July 2014
GREECE
NATIONAL BANK
Macro View
June 2016
OF GREECE
 Tourism has increased strongly since 2011, showing notable resilience

to the macroeconomic headwinds. The share of travel revenue in GDP,
THE TOURISM SECTOR which is utilized as a simple measure of the direct contribution of
PROVIDES MUCH STRONGER- international tourism to the economy, increased cumulatively by 2.1 pps
THAN-INITIALLY-ESTIMATED to 7.6% of GDP in 2015 from 5.5% in 2011, with a direct support to GDP
growth of 0.4% per year in 2011-2015.
SUPPORT TO THE ECONOMY
 NBG Research believes the direct impact of the tourism sector on GDP
growth in recent years is significantly larger, as travel data based on
surveys are becoming increasingly less reliable due to the use of more
sophisticated payment methods. NBG Research constructs a supply side
measure of non-resident tourism services, which indicates that the
Macroeconomic Indicators
value added of the sector increased by 3.5 pps of GDP between 2011
& Fiscal Outlook, pages 13-20
and 2015, 1.4 pps of GDP (and 62%) higher than the increase from the
survey data, despite the fact that NBG’s measure of tourism services
(comprising only accommodation and food) is significantly narrower
than that of travel revenue, and moreover, nets out operating costs.
Indeed, value added per tourist increased by 57% during this period.
 The increase in value added reflects higher output as well as lower

production costs (intermediate expenditure). Specifically, output
related to non-residents is estimated to increase by €5.9 bn in 2011-
2015 (plus 74% cumulatively), and reflects, inter alia, the improving
capacity of the domestic accommodation and food services sector to
offer higher quality services as reflected in upgrades of the
accommodation infrastructure, which is mainly related to investment
initiated prior to the beginning of the crisis. Moreover, production costs
declined considerably (-12.8% between 2011 and 2015), despite the
significantly higher output, due to ongoing business restructuring --
mainly in the accommodation sector -- and falling input costs.
Direct contribution of international tourism to GDP

growth: demand vs supply-side perspectives
2,0 forec.
1,5 pps
1,0
0,5
0,0
-0,5
-1,0
Paul Mylonas, PhD
2016-23f
2010
2011
2012
2013
2014
2015
(+30210) 334 1521

e-mail: pmylonas@nbg.gr
Value added - accommodation and food services
Travel revenue (balance of payments)
Sources: National Accounts, balance of payments data and NBG estimates
NBG Economic Analysis Department

86 Eolou Str., 102 32 Athens, Greece
https://www.nbg.gr/en/the-group/press-office/e-spot/reports
Greece
Macro View
June 2016
 Profitability in the tourism sector has also increased notably in recent

years, making the sector attractive for investment. Specifically, the
share of labor compensation declined due to a significant wage
adjustment in this sector by 24% since 2011 -- 2x times more than the
economy average wage reduction of 12%. As a result, gross operational
profits corresponded to about 40% of each euro of value added
generated in the sector in 2015 -- 20% higher than the average of Spain
and Portugal.
 Based on World Travel & Tourism Council (WTTC) long-term projections

of the increase in tourism demand until 2023, it is estimated that about
€5.5 bn of new investments (3.1% of 2015 GDP) in new hotel capacity
and equipment will be needed in the years 2017-2023 to bring the
projected occupancy in line with its 15-year average (83% in Q3). Note
that without new investments, the occupancy rate would increase to
95% by 2018.
 As a result of the higher demand -- and the increased capacity -- the

combined contribution to GDP growth from new investment and value
added generation is estimated at 1.3% per year in 2017-23, more than
double the average of the previous decade.
Greece: Economic & Market Analysis | June 2016| p. 2

NATIONAL BANK OF GREECE | Greece: Macro View
THE TOURISM SECTOR PROVIDES MUCH STRONGER-

THAN-INITIALLY-ESTIMATED SUPPORT TO THE
ECONOMY
Nikos S. Magginas, PhD
Head of Greece Macro Analysis Tourism has increased strongly since 2011, showing notable
(+30210) 334 1516
e-mail: nimagi@nbg.gr resilience to the macroeconomic headwinds and high uncertainty
Effrosyni Alevizopoulou, PhD arising from the negotiations with creditors on a series of economic
(+30210) 334 1620
e-mail:ALEVIZOPOULOU.E@nbg.gr programmes and the implementation of new fiscal measures
Aikaterini Gouveli, MSc equivalent to about 10% of GDP during the past four years. Indeed, in
(+30210) 334 2359
e-mail: gouveli.aikaterini@nbg.gr the period 2011-2015, the cumulative growth in tourist arrivals
reached 44%, compared with cumulative growth of 17.4% for the
Tourism activity increased strongly average of Spain, Portugal, Italy and Turkey. Both revenue and
in recent years… arrivals climbed to historical highs in each of the past six years,
_______________________________________________
reaching €14.1 bn and 23.6 mn visitors, respectively, in 2015 from
International tourist arrivals €10.5 bn and 16.4 mn in 2011. The share of travel revenue in GDP,
200 200 which is often utilized as a simple measure of the direct contribution
index
175 2000=100, 175 of international tourism to the economy, increased cumulatively by
2015 UNWTO estimates
for IT,SP,FR,PT 2.1 pps to 7.6% of GDP in 2015 from 5.5% in 2011, while its share in
150 150
total exports value reached 26.6% in 2015 from 20% in 2011. These
125 125
trends imply a direct contribution of international tourism to GDP
100 100 growth of +0.4 pps per annum in 2011-2015.
75 75 NBG Research believes the direct impact of the tourism sector on GDP
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
growth in recent years is significantly larger than the above numbers

Italy France
Portugal Spain
suggest. Indeed, the results of the border survey, on the basis of
Greece which travel data are compiled, are increasingly underestimating
actual revenue and spending of non-residents as traveling through
…with Greece over-performing multiple countries gains ground rapidly, along with the increasing role
against the main competitors… of remote payments and online bookings, as well as credit card use
_______________________________________________
by foreigners in Greece, all of which distort the traveler’s perception
of the final spending on tourism services.
International tourism revenue as
percentage of GDP Our approach analyzes the sector from the supply-side
10 10
9
%
*IMF forecast, 9 decomposition of the GDP accounts. The analysis focuses on business
8 NBG estimates 8
7 7
activity in the accommodation and food services sector, which is
6 6
5 5
closely related to tourism demand by residents and non-residents
4 4 and accounts for the bulk of tourism-related output. This output
3 3
2 2 comprises the provision of accommodation services to visitors and
1 1
0 0 other travelers (residents and non-residents) by hotels, and other
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016*
accommodation facilities/entities, as well as catering services in

Greece Portugal
Spain Italy hotels, restaurants, bars, cafeterias and other similar activities. Even
Turkey
this proxy, which is by construction a more narrow definition of
Sources: Eurostat & BoG, balance of payments data
tourism services, as it does not include all spending but just the main
categories, appears to result in higher estimates of the size of the
Sources: BoG, IMF, Eurostat, NBG estimates
tourism sector than that derived from border estimates.
GREECE | NBG Macro View |June 2016| p. 3

…in terms of tourism revenue and The numbers attached by the media to the size of the tourism sector
arrivals
are usually much larger, as they include the indirect impact of tourism
Tourism receipts and arrivals
25 20
services (i.e., second round effects). Indeed, the full impact (direct
y-o-y change
20 15 and indirect) of tourism is traditionally derived by applying a
15 10 Keynesian multiplier to the direct impact -- related to resident and
10 5
non-resident demand -- which, in the case of Greece, results in a
5 0
0 -5 10.2% share of GDP (based on the demand side estimates of the
-5 -10 direct effect). Moreover, sectoral studies analyzing the role of
-10 -15
tourism in the economy estimate an even higher average share of
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
tourism (resident and non-resident) in Greek GDP of more than 15%
Source: Bank of Greece
of GDP, and in some cases 20% by including in the tourism sector
Non-resident arrivals (left axis)
Tourism receipts (gross, right axis)
perimeter several activities with indirect or partial connection with
tourism (such as transportation, related business services and other
The performance is even more auxiliary activities), as well as investment made by tourism business,
impressive from a supply-side
perspective: Total sectoral output while they do not usually adjust for the drag related to the import
increased by 2.2% of GDP in 2011- content of tourism. The broader definitions are hard to measure, as
2015…
_______________________________________________ they are often arbitrarily set. As such, their use is limited in analysing
developments in the sector (e.g. competitiveness), especially over
Output of accommodation & food short time periods. As a result, NBG Research’s analysis focuses on
services sector developments in the narrower definition, ignoring the wider impact
14
13 euro bn 13 on the economy.
12
11 11 Higher output reflects rising international demand for services of
10
9 9 increasing quality
8
7
Source: Eurostat Sectoral National
7 Overall output of the accommodation and food services sector
6 Accounts and NBG estimates based on
5 Greek household budget survey data for 5 increased (in constant prices), according to national accounts data
4 residents
3 3
from the production side of GDP, by c. €3.6 bn (2.2% of GDP, constant
2009
2010
2011
2012
2013
2014
2015e
prices) between 2011 and 2015 to 11.6% of GDP in 2015. This growth
Non-residents Residents
reflects the fact that increasing external demand more than
Accommodation and services sector -
compensated for the shrinkage of domestic demand.
Sectoral output decomposition
d(2015-
To compare production trends related to external demand with the
2011 2015
2011) balance of payments data on non-residents’ spending in the economy
euro bn
Residents 9,9 7,6 -2,2 (travel revenue data), we subtract residents’ spending in this sector
Non residents 7,9 13,8 5,9 derived from the Greek household budget survey from the total. The
Total 17,9 21,5 3,6
two sources are comparable – and thus one can be subtracted from
0
% GDP the other – since the household survey is directly used for compiling
Residents 5,2% 4,1% -1,1% the national accounts. Residents’ spending, based on the household
Non residents 4,2% 7,5% 3,3%
survey, declined significantly in recent years (-23% cumulatively, or
Total 9,4% 11,6% 2,2%
Memo item: €2.2 bn in 2012-2015 from €9.9 bn in 2012). Accordingly, the implied
BoP travel revenue (bn) 10,5 14,1 3,6
increase in output related to non-resident demand is estimated to be
BoP travel revenue (% GDP) 5,5% 7,6% 2,1%
€5.9 bn (+74% cumulatively) in 2011-2015 (from €7.9 bn in 2011 to
Sources: BoG, Eurostat, NBG estimates €13.8 bn in 2015), and accounts for 64% of sector output in 2015 from
45% in 2011. The respective increase in gross travel revenue data in

…driven by rapidly increasing the balance of payments was 37% lower (+€3.7 bn in 2012-2015).
demand by non-residents
_______________________________________________ This is a notable difference since (as mentioned above) the
Output of accommodation & food accommodation and food services sector corresponds to a narrower
services definition of tourism activity compared with travel revenue, which
25 Source: Eurostat
euro bn
National Accounts includes spending on a broader range of goods and services, such as
20 transportation, communications, retail trade as well as
15 accommodation and food services.
10 The increase in output reflects, inter alia, the improving capacity of

the domestic accommodation and food services sector to handle
5
increasing demand by non-residents for higher quality services. This
0
improvement reflects, inter alia:
2011
2012
2013
2014
2015e
Residents Non-residents
• An upgrade of capacity reflected in the steadily rising gross fixed
capital formation in this sector during the previous decade, that
Strong investment initiated prior to peaked in 2008 at 0.7% of GDP from 0.3% in 2001 -- a cumulative
the beginning of the crisis…
_______________________________________________ increase in gross investment of €7.1 bn (constant prices)
Number of bedrooms & total between 2000 and 2008. This investment led the total capital
tourism investment stock of the accommodation and food services sector to €28.5bn
4 25
%GDP thousand
bedrooms in 2013 (at current replacement costs, adjusted for depreciation)
20
3 from €26 bn in 2006. About 60% of this cumulative increase
15
reflected construction activity and the remainder investment in
10
2
equipment. Moreover, the share of equipment in total capital
5
stock reached a historical high of 22% (or €6.2 bn) in 2013 from
1 0
16%, on average, in 2005-2008, indicating an upgrade of the
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Investment in tourism sector (national accounts, productive capacity, as this share is typically positively
%GDP, left axis)
Number of hotel bedrooms, annual change ( 2y
correlated with the provision of more differentiated services. It
m.a., right axis) should be noted that a significant part of these investments in
new capacity, especially in the hotel segment, were initiated
…led to an increase in the level of
capital, along with a significant prior to the beginning of the crisis, and have been only
qualitative upgrade of the completed in recent years, as the average time of completion for
accommodation infrastructure…
_______________________________________________ construction projects is estimated at about 3-4 years. The
Greece: Quality decomposition of additional capacity, in conjunction with the closing of smaller
hotel capacity
uncompetitive units, resulted in an increase in the average size
800 Thousand
700 bedrooms of Greek hotels to 41.6 rooms in 2015 from 40.9 in 2011 and 39.0
600 in 2000 (Source: Hellenic Chamber of Hotels).
500
400 • However, aside from the absolute level of capital and aggregate
300
200
capacity additions, the quality of capital stock is also an
100 important determinant of sectoral output. In this respect, a
0
significant qualitative upgrade of the accommodation
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
infrastructure also occurred in recent years, with the proportion

Source: Hellenic Chamber of Hotels
of rooms in 4 and 5-star hotels rising to 40.6% of the total room
1 star 2 star 3 star 4 star 5 star
Sources: Eurostat, HCH, NBG estimates capacity in 2015 compared with 38% in 2010 and 31% in 2000.
This qualitative upgrade reflected not only new units, but also

…reflected in the increasing share of upgrades from lower categories supported by renovation and
4 and 5-star hotels in total hotel
capacity… services upgrades. In this respect, an increasing share of the
_______________________________________________
Greek accommodation sector succeeded in providing services of
Greece: Quality decomposition of a higher quality and increasing differentiation including e.g.,
hotel capacity (per cent of total) sports, health, recreation, transportation, communications,
cultural and agro tourism services, along with the more
100
90
80
conventional accommodation facilities. Moreover, higher
70
60
quality hotel categories experienced the largest increase in
50 occupancy rates during the period 2011-15 (from 80% in
40
30 Q3:2011 to 85% in 2015 for 4 and 5-star hotels compared with
20
10
0
78% for hotels of 3-stars or less), underlining the role of these
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
units in the provision of more competitive and value-generating

Source: Hellenic Chamber of Hotels services.
 The notable improvement in the competitiveness of the Greek
accommodation sector is exemplified by the overperformance
…which strengthened the
international competitive position of of Greek hotels against their competitors (EU 25 countries) as
the Greek accommodation sector regards the customer satisfaction rating in 2014-2015. Indeed,
_______________________________________________
according to the General Satisfaction Index (GRI: Global Review
Quality decomposition of hotel Index, ReviewPro, SETE), Greek hotels also attained higher rates
capacity - percent of total
than their competitors regarding special sub-indicators of the
100
related survey, such as value for money, service, room quality,
80
food, beverages and cleaning services. The highest rate of
60
satisfaction (88%, on average in 2015) and the strongest
40
20
improvement in 2014-15 was recorded among customers of 5-
0
star hotels followed by 4-star hotels.
Greece Greece Italy Spain Portugal
2008 2014  Labor market trends also accompanied the solid rebound in
Source: Hellenic Chamber of Hotels & National sectoral activity, as 68% of new employment positions in 2013-
authorities
2015 have been created in the accommodation and food
services sector, with the average annual growth in employment
Greek hotels: customer in this sector reaching 6.7% in the same period compared with
satisfaction rating (GRI, index) an average decline in economy-wide employment of 0.7% y-o-y.
90 index These developments also surpass employment creation in this
89 100= maximum
88 sector in other euro area countries.
87
86 • There has been a significant increase in arrivals from high
85
84 income markets and/or markets with a higher propensity to
83
82
spend, such as Russia and, more recently, the US and UK, with
Sources: ReviewPro,
81
SETE Intelligence revenue per arrival from these markets exceeding the respective
80
average for travelers from the euro area by 12%, 71% and 15%,
Jan-14
Jan-15
Jan-16
Jul-14
Jul-15
Apr-14
Oct-14
Apr-15
Oct-15
Apr-16
respectively, in 2015. These markets, along with the euro area

.
5 star 4 star 3 star countries, jointly account for 51% of arrivals and 70% of travel
Sources: Eurostat, HCH, ReviewPro/SETE, NBG estimates revenue in 2015. Higher quality foreign visitors are typically
characterized by a high propensity to spend on a broader range

of facilities and auxiliary services (e.g. transportation,

Travel & tourism competitiveness index
(1 low - 7 high, 2015) communications) and goods (e.g. food and beverages), as well
Source: World
Business
environment
Economic Forum as on services with a high degree of differentiation and/or
Cultural resources 7 Safety & security
& business travel 6
5
quality (e.g. restaurants, sports, health care, recreation and
Natural resources Health & hygiene
4
3 culture).
Tourist service 2 Human resources
infrastructure 1 & labour market
Ground & port

0
• Data on the value of transactions made in Greece using debit and
ICT readiness
infrastructure
Air transport Prioritization of

credit cards issued abroad provide some additional indirect
infrastructure Travel & Tourism
Environmental International evidence on the ongoing rebalancing of Greek tourism. The
sustainability Openness
Price
competitiveness average annual growth of the value of these transactions, which
Spain Portugal Eurozone Greece are considered to be closely related to foreigners’ spending on
tourism services, increased by an unprecedented 22% y-o-y in
The accommodation and food
services sector has been the main each of the years 2013 and 2014 (i.e. prior to the imposition of
driver of employment creation capital controls). This increase outpaced, by a large margin, the
_______________________________________________
rise in international tourism revenue (+13.3% per annum, in the
Employment by sector of same period) and the respective growth in cashless payments by
economic activity
110 non-residents in other euro area countries (e.g. an estimated
100 average cumulative growth of 13% in Cyprus, Portugal and
90 Spain). The above trends are also suggestive of the increasing
80 value of services provided by the official tourism sector. It could
70
index
also be seen as an indication of a potential underestimation of
60 2008=100
non-residents’ spending in recent years, as approximated by the
50
border survey used in the compilation of travel revenue data.
2008
2009
2010
2011
2012
2013
2014
2015
Agriculture, forestry and fishing Production costs declined significantly as ongoing business
Manufacturing
Wholesale and retail trade restructuring -- mainly in the accommodation sector -- supported
Transportation and storage
Accommodation and food service activities productive efficiency
There has been a significant Another notable trend that characterized the accommodation and
increase in arrivals from high income
food services sector in recent years relates to the significant
markets and/or markets with a higher
propensity to spend reduction in production costs (recorded in national accounts as
_______________________________________________
“intermediate expenditure”). Total intermediate expenditure in the
Tourism receipts by country of
accommodation and food services sector is estimated to have
origin declined by 20.8% or €1.8 bn (in constant prices) between 2011 and
2,5 2,5
bn eur 2015 to 3.7% of GDP from 4.6% in 2011. Impressively, enterprises in
2,0 2,0 this sector managed to handle increasing demand, provide higher
1,5 1,5
quality services and, at the same time, reduce spending on
production inputs. In fact, the ratio of total intermediate expenditure
1,0 1,0
per euro of sectoral output declined to a multi-year low of c. 32 cents
0,5 0,5 in 2015 from 50 cents in 2009 (euro in constant prices). Assuming
0,0 0,0
identical input costs for providing services to residents and non-
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
residents, the estimated decline in the intermediate expenditure for

producing the higher output demanded by non-residents was -12.8%
UK USA Russia
Sources: WEF, Eurostat, HCH, BoG

between 2011 and 2015 (-€0.5 bn).

This reduction in production costs reflects a change in the structure

The increase in the value of of inputs and improving efficiency in their use, which is mainly due to
transactions made in Greece using the increasing role in sectoral activity of larger and more efficient
debit and credit cards issued abroad
outpaces the growth in travel
business entities -- especially in the accommodation sector – and, just
revenue by a considerable margin as importantly, an increasing use of cheaper (often domestically-
_______________________________________________
produced) inputs.
Transactions with cards issued The role of larger and more efficient business units in business activity
abroad & travel revenue
(non-residents) expanded significantly in recent years – especially in the
25 y-o-y 25 accommodation sector – and is estimated to have contributed to
higher productive efficiency and lower production costs. Indeed, the
15 15
share of intermediate expenditure for the production of each unit of
5 5
output is about 15% lower for larger firms (with more than 50
-5 -5
*Sources: ECB & BoG
employees) compared with smaller firms (Eurostat SBS data for the
-15 -15 Greek accommodation sector). This rebalancing has evidently played
2008
2009
2010
2011
2012
2013
2014
2015e
a significant role in supporting productive efficiency as reflected in

Tourism revenue, gross (Source: BoG, balance of
payments) the increase of the contribution of larger firms in total value added
Value of transactions at domestic POS terminals
with cards issued abroad generation of this sector to 42% (of the total) in 2013 from 31% in
2010 (Eurostat SBS and national accounts data) and an even higher
share in 2015 (estimated as no data available).
The cost reduction in the accommodation and food services sector
has also been supported by the broad-based disinflation of the 2013-
2015 period. The significant decline in the cost of a number of mostly
The significant reduction in
production costs also supported labor intensive services -- as reflected in the path of relevant producer
value added generation prices and wages -- permitted a further rationalization and
_______________________________________________
streamlining of the sector’s cost structure. Indeed, prices of
Intermediate expenditure in
engineering, technical testing and architectural services declined by
accommodation & food services 15.0%, cumulatively, in 2011-15, cleaning services by 5.5%,
euro bn accounting, bookkeeping, tax and auditing services by 3.0%, with
10 10
price discrepancies among services providers also increasing
8 8
significantly as suggested by the dispersion in the answers of the
6 6
relevant survey participants (EL.STAT, and Eurostat).
4 4
This streamlining, according to market sources, also included
2 Source: Eurostat Sectoral National Accounts and 2
NBG estimates based on Greek household budget outsourcing of non-core activities in conjunction with a shift towards
survey data for residents
0 0
to cheaper and/or more efficient suppliers (e.g. maintenance,
2009
2010
2011
2012
2013
2014
2015e
security, personnel hiring).

Total Value added up by almost 60% since 2011 to c. 8% of GDP in 2015
The measure of the economic contribution of a sector in GDP is gross
value added. Recall that value added corresponds to the difference
between the value of sectoral output and the corresponding
Sources: ECB, Eurostat, BoG, NBG estimates
intermediate expenditure.

Value added increased by c. 60% As discussed above, trends in both components of the value added
since 2011…
_______________________________________________ have been supportive of new value added creation. Indeed, total
value added generated by the accommodation and food services
Accommodation and food
services: value added as per cent sector increased by 59% (+€5.4 bn) in the period 2011-2015,
of the total value added reflecting a cumulative increase in total output of 20% (+€3.6 bn) and
generated in the economy
10 10 a decline in total intermediate expenditure of -21% (-€1.8 bn) . The
%
8 8 increase in value added related to the provision of services to non-
6 6 residents is estimated to have been +160% (+€6.4 bn), reflecting an
4 4 estimated sharp increase in output (+€5.9 bn) and an estimated
2 2 decline in intermediate expenditure for producing this output (of €0.5
0 0 bn). The impact on average GDP growth in 2011-15 from the above
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
developments is estimated at 0.8% per year, as regards the

Greece Spain
contribution of the total sectoral value added in GDP, which increases
France Italy
Cyprus Portugal to 1% per annum for the value added related to international tourism.
The respective direct contribution to GDP growth of non-residents’
… reflecting the solid growth in non-
residents demand spending, as measured by BoP-travel revenue trends, is only 0.4% per
_______________________________________________
year in this period.
Gross value added generated in The increase in value added to the economy as a whole is even
accommodation & food services
greater, as the cost reduction has been accompanied by import
15 15
13
euro bn
13 substitution – which does not, by itself, increase the value added of
11 11
the specific sector, ceteris paribus, but does increase the value added
9 9
7 7 of the economy (e.g. the value added of a sector producing the input
5 5
3 3
increases).
1 1
-1 -1 To shed some light on the role of import substitution in this sector we
2009
2010
2011
2012
2013
2014
2015e
extract the change in the composition of inputs in the sector between

Total imported and domestically-produced ones. We use as a reference
Source: Eurostat Sectoral National Accounts and point the year 2010, when the latest national accounts data on the
NBG estimates based on Greek household budget
survey data for residents structure of inputs used by this sector are available (including their
decomposition in domestic and imported ones). According to this
Drivers of total value added
creation in the accommodation & data, the annual value of imported goods used by the
food services sector accommodation and food services sector amounted to €3.0 bn in
(residents & non-residents, 2y m.a.)
2 2 2010. Subsequently, monthly data on imports of the same categories
bn eur
Χιλιάδες
of goods are used to estimate spending on these inputs in the years

1 1
2011-2015. To this end, we use additional information from the
0 0
seasonal patterns of import spending with a view to identifying the
-1
Source: Eurostat
-1 part of import demand related to international tourism. Specifically,
National Accounts we assume that the residents’ average monthly spending on these
-2 -2
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
import categories corresponds to the average monthly spending in

Contribution of intermediate expenditure the months January-April and October-December (months with little
Contribution of sectoral output
VA in constant prices tourism). Therefore, the import demand related to international
Sources: Eurostat, NBG estimates
tourism in each year corresponds to the difference between the total
import value in these categories for the months May-September and

the estimated import spending of residents for this period. In this

setting, the decline in intermediate expenditure on imports of non-
residents between 2011 and 2015 is estimated at €0.5 bn -- or nearly
⅓ of the total decline in intermediate expenditure in this period.
Breakdown of value added generation in the
accommodation and food services sector Complementary evidence from recent trends in manufacturing
2011 2015 d(15/11) 2011 2015 d(15/11) production of the food and beverage sector – provided that food and
euro bn % GDP beverages account for almost 50% of total imports of the
Total
accommodation and food services sector -- are supportive of the
Output 17,9 21,5 3,6 9,4% 11,6% 2,2% previous analysis of import substitution. Indeed, domestic production
Interm. Expendit. 8,7 6,9 -1,8 4,6% 3,7% -0,8% of food and beverages, net of exports, increased by almost €0.55 bn
Value added 9,2 14,6 5,4 4,8% 7,9% 3,1% between Q4:2011 and Q4:2015. In sum, import substitution is
estimated to have provided an additional 0.3% cumulatively in
Residents
economy-wide value added and GDP in this period.
Output 9,9 7,7 -2,3 5,2% 4,1% -1,1%
Interm. Expendit. 4,8 3,5 -1,3 2,5% 1,9% -0,6% Profitability is increasing as the share of labor compensation in
Value added 5,1 4,2 -1,0 2,7% 2,2% -0,4% value added declines
Non-Residents
The increase in value added has been accompanied by a decline in
Output 7,9 13,8 5,9 4,2% 7,5% 3,3% labor costs in the sector, which started in 2010 and gained traction in
Interm. Expendit. 3,9 3,4 -0,5 2,1% 1,8% -0,2% 2011-2013. Overall, economy-wide wages declined by 21% in 2009-
Value added 4,0 10,4 6,4 2,1% 5,6% 3,5% 2015, and by an estimated 12% in 2011-2015. The decline has been
combined with a sharp increase in flexible employment forms, which
account for about 50% of new job openings in the economy. This
rebalancing is even more intense in the accommodation and food
services sector, which has been traditionally characterized by
The sharp adjustment in labor relatively high flexibility as regards compensation and employment
costs… schemes. In this vein, it is notable that total spending on labor
_______________________________________________
compensation in the accommodation and food services sector
Compensation of employees, declined by 16.5% since 2011 (and by almost 33% compared with
index, accommodation and food 2009) to below 20% of the sectoral value added in 2015 from 32% in
services 2003=100
180
2011, while employment increased by about 9% cumulatively. This
index
160 2003=100 development suggests that the adjustment in the wage bill in this
140
sector was significantly larger than the economy’s average during the
period 2011-2015, despite the increase in employment (described
120
above). Indeed, labor cost index data (LCI) suggest that the average
100
level of wages and salaries in the accommodation and food sector
80
declined by an estimated 24% since 2011.
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Greece Spain Consequently, gross operating surplus and mixed income -- which
France Italy
Portugal closely track business (gross) profitability trends – increased, to an
estimated, 70% of sectoral value added in 2015 from 58% in 2011.
Please note that the high share reflects a significant percentage of
Sources: Eurostat, NBG estimates self-employed and family run businesses in this sector (i.e., mixed
income). In this respect, we combine Eurostat data on the
decomposition of gross operating surplus and mixed income (at

… was 2x times more than the factor costs) available until 2013 with LFS data on sectoral
economy average wage reduction…
_______________________________________________ employment trends by type of employment, to estimate separately
Greece: Labor cost index - the trends of gross operating surplus and mixed income until 2015.
wages & salaries
Clearly gross operating surplus — which tracks operational
Source: Eurostat
100
index
100 profitability of corporates – emerges as the exclusive driver of the
2009=100
90 90 increase in non-labor income provided that the number of self-
80 80 employed and business owners in the sector declined by 7%
70 70
cumulatively since 2011 in contrast to wage earners who increased
by almost 20% (s.a. data) in this period. In this respect, gross
60 60
operational profits correspond to about 40% of each euro of value
50 50
added generated in the sector in 2015 – 20% higher than the average
2009
2012
2013
2014
of Spain and Portugal. The above trends clearly reveal the

Total business economy
Accommodation & food services sector
attractiveness of this sector from an investment perspective. Data
from the business sector are also suggestive of a steady improvement
…and gave a decisive push to the
of the sectoral EBITDA since 2012 (EBIDTA of tourism business
operational profitability of the sector
_______________________________________________ increased by 23.7% in the period 2012-2014, ICAP data).
Gross operating surplus & mixed Investment in tourism is profitable and key to unlocking Greece’s
income as per cent of sectoral sizeable exporting potential
value added (accommodation &
food services) Large investments in the previous decade and the reduction in
80%
Sources: Eurostat & NBG residents’ tourism activity permitted Greek tourism to keep up with
70% estimates using LFS data
60%
increasing external demand without reaching capacity limits.
50% However, data on hotel occupancy rates in the core months of the
40%
tourism season (Q3) show a steady increase in recent years. Under
30%
20% the baseline scenario of a gradual recovery in domestic demand
10%
(corresponding to a moderate recovery in private sector disposable
0%
income of 1% in 2017 and 1.8% in 2018) and assuming growth in
2009
2010
2011
2012
2013
2014e
2015e
Mixed income Gross operating surplus

external demand to be similar to the average WTTC estimates for the
Mediterranean region (c. +3.0% per annum in 2017-2023), capacity
Investment in tourism is profitable constraints in the accommodation sector are expected to become
and key to unlocking Greece’s
sizeable exporting potential
binding in 2018. Specifically, hotel occupancy is estimated to rise to a
_______________________________________________ 10 year high of 86% in Q3:2017 (with occupancy rates in 4 and 5-star
Tourist accommodation
occupancy rate during Q3
hotels approaching 90%) and to 88% and 95%, respectively, in
(seasonal peak) Q3:2018. These figures suggest that the Greek accommodation sector
100
% will be unable to handle demand at a regional level during the peak
90
season in the near future. In this respect, the timely initiation of
80 investment in new capacity is a necessary condition for expanding
further the contribution of this sector and overcoming capacity
70 NBG
estimates constraints.
60
We estimate that about €3.5 bn of new investments (2.0% of 2015
Q3:2004
Q3:2005
Q3:2006
Q3:2007
Q3:2008
Q3:2009
Q3:2010
Q3:2011
Q3:2012
Q3:2013
Q3:2014
Q3:2015
Q3:2016
Q3:2017
Q3:2018
Q3:2019
Q3:2020
Q3:2021
Q3:2022
Q3:2023
GDP) in new hotel capacity will be needed in the years 2017-2023

Greece with sufficient investment (adjusting for capital depreciation) to bring the projected occupancy
Greece with weak investment
rate beyond 2019, in line with its 15-year average of 83% (in Q3,
Sources: Eurostat, NBG estimates

which is analogous to the average of Spain and Portugal) and

successfully respond to the ongoing shift of demand to higher quality
hotels. If we include spending on equipment, the effective increase in
The combined contribution to GDP
growth from new investment and
sectoral investment in this period is estimated to reach €5.5 bn (3.1%
value added generation is estimated of 2015 GDP), assuming a share of investment in equipment in total
at 1.35% per year in 2017-2023
_______________________________________________
sectoral investment similar to the average in 2000-2008. Thus, the
direct support to annual GDP growth from this investment is
estimated at 0.3% per year in 2017-2023.
Direct contribution of
international tourism to GDP By benchmarking the 2011-2015 production trends -- and assuming
growth: demand vs supply-side
perspectives that intermediate expenditure remains stable as a per cent of sectoral
2,0 pps forec. output in the following years (i.e. no additional contribution in value
1,5
added creation from declining input costs), we estimate that the
1,0
0,5 average annual growth in value added could reach 9.0% y-o-y in 2017-
0,0 2023 (vs 13.2% in 2011-2015), which corresponds to a direct boost to
-0,5
-1,0 annual GDP growth of 0.8% in this period. The recovery of resident
2010
2011
2012
2013
2014
2015
2016-23f
demand for tourism services (+3% per annual in 2017-2023) is

Value added - accommodation and food services
expected to contribute another 0.2 pps to annual GDP growth.
Travel revenue (balance of payments) Overall, the combined support to annual average GDP growth in
Sources: National Accounts, balance of payments 2017-2023 from new investment and the supply of higher value
data and NBG estimates
added services to residents and non-residents is estimated at 1.3%
per year, more than double the average of the previous decade.

Appendix
Da
GREECE
Macro View - Economic Outlook | June 2016
Mild recession continues in Q1:2016 – positive confidence and

liquidity effects from the recent completion of the 1st review of
the new Programme are expected to counteract the impact of
increasing fiscal drag, paving the way for a pick-up in economic
activity in H2:2016
Latest indicators suggest
GREECE | NBG Macro View | June 2016

NATIONAL BANK OF GREECE | Greece: Macro View |June 2016
Greece: Tracking the economy’s cyclical position
Aug-13
Aug-14
Aug-15
May-13
Nov-13
May-14
Nov-14
May-15
Nov-15
May-16
Feb-13
Mar-13
Apr-13
Dec-13
Apr-14
Dec-14
Dec-15
Jun-13
Sep-13
Feb-14
Mar-14
Jan-14
Jun-14
Sep-14
Feb-15
Mar-15
Apr-15
Jan-15
Jun-15
Sep-15
Feb-16
Mar-16
Apr-16
Jan-16
Oct-13
Juλ-14
Oct-14
Oct-15
Jul-13
Jul-15
PMI (index level) 43 42,1 45 45,3 45,4 47 48,7 47,5 47,3 49,2 49,6 51,2 51,3 49,7 51,1 51 49,4 48,7 50,1 48,4 48,8 49,1 49,4 48,3 48,4 48,9 46,5 48 46,9 30,2 39,1 43,3 47,3 48,1 50,2 50 48,4 49 49,7 48,4
Industrial confidence (index level) -12,5 -11,6 -11,1 -6,7 -8,8 -10,6 -10,7 -5,3 -9,9 -11 -10,6 -11,2 -7,1 -4,1 -8,9 -4,9 1,3 1,5 0,3 -5,4 -0,6 1,3 -3 -7,9 -9,2 -10,2 -15 -13 -14,1 -26,4 -30,2 -23,3 -19,6 -16,6 -13,6 -10,1 -10,2 -7,8 -7,8 -11,6
Manufacturing production (yoy) 0,1 1,9 2,9 -2,1 5,7 -4,7 -4,3 -2,6 -4,9 -4,2 0,2 -0,5 3,1 -0,8 -1,5 2,4 -2,0 5,5 0,5 -0,8 4,7 7,0 4,1 3,3 5,1 8,9 3,8 -2,9 -3,5 -7,0 3,5 2,2 -1,5 1,5 4,4 4,6 -2,5 -3,6 2,8
Industrial production (yoy) -2,8 -0,4 1,0 -4,4 2,3 -7,2 -5,5 -3,2 -6,1 -6,6 -1,4 -2,8 0,5 -3,9 -3,2 0,3 -5,2 0,1 -4,7 -4,3 0,0 3,3 -2,7 0,1 1,8 5,4 0,5 -4,3 -4,4 -2,5 4,1 2,6 -2,1 2,0 6,2 5,7 1,4 -2,0 5,8
Services confidence (index level) -22,5 -22,4 -22,7 -13,1 -2,5 -4,6 -7 -9,7 -7,1 -8,1 -4,9 2,5 4,5 4,9 6 6,5 18,4 19,7 22,3 14,8 15,8 21,6 15,3 9 4,4 -0,3 -4,4 -10,1 -9,4 -27,6 -42,8 -15,1 -14,3 -15,4 -16,6 -5,3 -23,1 -17,3 -13 -11,4
Consumer confidence (index level) -71,4 -71,2 -71,8 -63,4 -66,5 -70,9 -76,6 -72,2 -66,2 -66,7 -63,3 -64,5 -65,2 -59,7 -52,6 -50,5 -47,7 -48 -54 -56 -50,9 -49,9 -53,9 -49,3 -30,6 -31 -40,5 -43,6 -46,8 -52,9 -64,8 -64,2 -59,6 -64,1 -61,1 -63,9 -66,8 -71,9 -73,7 -71,9
Retail confidence (index level) -33,1 -25,9 -26,7 -15,2 -19,1 -21 -21,3 -22,5 -22,8 -18,1 -15 -11,6 -8,4 -10 -9,7 -7,4 2,5 4,8 6,6 -2,5 5,0 10,3 4,7 -1,0 -3,9 -4,1 -0,6 0,2 -3,5 -25,9 -31,0 -20,0 -15,3 -12,8 -5,3 -3,4 3,2 3,0 5,6 5,1
Retail trade volume (yoy) -14 -6 -14 -2 -8 -14 -8 -5 -1 3 -6 -3,0 -2,9 -3,4 5,0 -6,1 1,7 1,5 3,2 0,0 2,1 -1,3 -1,4 0,6 -1,7 1,0 -1,8 4,1 -0,4 -7,2 -2,1 -3,3 -2,4 -4,4 0,2 -1,7 -6,8 -1,6
Construction Permits (yoy) -45 -56 -16 -51 -15 -4 -30 -37 9 89 -44 -41 -5 4 -8 10 53 -24 -5,3 7,2 -2,8 -36,4 13,1 12,2 36,6 35,6 -3,5 6,1 -15,1 -25,2 -28,5 -13,1 -38,2 -4,5 67,3 -5,2 8,3 -34,8
House prices (yoy, quarterly series) -12 -12 -12 -12 -12 -10 -10 -10 -10 -10 -10 -9 -9 -9 -8 -8 -8 -7 -7 -7 -6 -6 -6 -4 -4 -4 -5 -5 -5 -6 -6 -6 -5 -5 -5 -5 -5 -5
Construction confidence (index level) -47 -46 -39 -35 -34 -32 -30 -18 -37 -33 -39 -23 -23 -14 -20 -20 -19 -20 -21 -33 -21,2 -34,2 -16,6 -29,8 -31,9 -40,0 -41,9 -44,5 -48,0 -62,5 -67,5 -52,8 -49,4 -47,0 -49,1 -37,9 -37,5 -35,9 -45,9 -39,0
Employment (y-o-y) -7,3 -6,9 -6,0 -5,5 -4,6 -4,3 -3,5 -2,9 -3,1 -2,8 -2,7 -1,2 -0,9 -0,2 -0,5 0,2 1,1 1,7 1,0 1,3 1,3 1,6 1,6 0,9 1,2 0,7 2,1 2,2 1,9 1,9 2,4 2,2 2,7 2,6 3,0 2,2 2,3 2,5
Interest rate on new private sector loans (CPI deflated) 5,7 6,0 6,3 6,0 5,9 6,2 6,8 6,7 7,6 8,4 6,8 7,1 6,5 6,8 7,2 7,4 6,3 6,1 5,6 6,0 7,0 6,4 7,6 7,9 7,1 7,1 7,0 7,1 6,9 7,0 6,3 6,5 6,0 5,7 5,3 5,7 5,4 6,2 6,1
Credit to private sector (y-o-y) -8,9 -6,8 -6,8 -7,4 -6,8 -5,1 -4,8 -4,7 -4,8 -4,7 -4,3 -3,5 -3,7 -5,5 -4,9 -4,4 -4,0 -3,9 -3,7 -3,7 -3,2 -3,0 -2,7 -1,6 -1,5 -1,2 -1,6 -2,8 -2,9 -3,3 -3,7 -3,6 -3,6 -3,7 -3,6 -5,0 -4,8 -5,1 -4,6 -3,2
Private sector deposits (y-o-y) -2,3 -2,3 -3,9 1,6 4,9 2,4 2,5 1,7 0,5 0,4 -1,5 -2,4 -3,9 -3,0 -1,5 -2,1 0,3 0,7 1,4 2,2 2,6 2,1 -1,7 -7,2 -11,2 -12,9 -16,3 -18,6 -25,4 -26,3 -26,6 -26,3 -26,5 -28,3 -25,3 -20,3 -16,6 -15,7 -12,5 -10,0
Interest rate on new time deposits (households, CPI deflated) 4,4 4,6 4,8 4,5 4,3 4,2 4,6 4,2 5,0 5,7 4,5 4,3 3,9 4,2 4,1 4,5 3,5 3,0 2,4 2,9 3,6 3,1 4,4 4,6 4,0 4,0 3,9 4,0 4,0 3,5 2,7 2,9 2,0 1,7 1,2 1,7 1,4 2,4 2,1
Economic sentiment index (EU Commision, NBG weights, Greece) 64 64 63 73 73 69 64 67 72 72 75 78 78 83 87 89 96 96 92 88 92 95 90 91 105 103 93 89 87 76 62 71 75 71 73 75 67 65 65 67
Economic sentiment index (EU Commision, Euro area) 90 90 88 89 92 93 96 97 98 99 100,7 101,4 101,2 102,7 102,2 103 102,3 102 101 100 100,7 100,6 100,7 101,5 102,2 103,9 103,8 103,8 103,4 103,9 104 105,5 106 106 106,6 105 104 103 104 104,7
Exports (other (excl.oil&shipping) y-o-y 6m mov.avg 13,3 19,7 26,2 29,0 30,4 33,3 29,3 30,5 25,2 25,5 20,4 13,4 10,9 5,9 0,4 -1,6 -2,2 -0,6 -0,7 0,1 2,6 1,9 3,9 3,9 5,5 7,9 9,6 9,7 10,2 9,4 7,8 5,0 2,2 1,3 -0,6 -1,9 -1,0 -0,6 -0,1
Imports (other (excl.oil&shipping) y-o-y 6m mov.avg -3 8 17 22 31 36 32 35 33 37 37 27 24 16 10 6 2 4 3 5 6 7 8 8 9 10 10 9 8 2 -1 -5 -6 -8 -10 -6 -4 -3 -2
NBG Composite Index of cyclical conditions ► ► ► ► -24,4 -21,9 -17,8 -17,1 -9,31 -16,9 -13,7 -7,01 -12,1 -9 -3,97 -0,8 -1,2 -0,2 0,5 1,3 2,2 2,4 3,5 3,9 4,5 0,2 -2,8 -6,5 -1,5 -2,5 -4,8 -9,5 -14,8 -18,9 -25,3 -26,5 -28,0 -30,0 -32,0 -34,2 -36,5 -36,3
Color map scale 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27
Rapid contraction Moderate contraction Slow contraction Stabilization Slow expansion Moderate expansion Rapid expansion
Sources: NBG, BoG, ELSTAT, EU Commission, IOBE
Greece: Growth Outlook

2014 2015 2016f 2014 2015 2016f
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2f Q3f Q4f
GDP (rea l , % y-o-y, s .a.) 0,7 -0,3 -0,8 1,3 0,9 0,4 0,9 -1,7 -0,9 -1,4 -1,5 -0,7 0,6
GDP (rea l , % q-o-q, s .a. ) … … … 1,4 -0,8 0,1 0,3 -1,3 0,1 -0,5 0,2 -0,4 1,3
Domestic Demand (y-o-y) 1,0 -1,4 -0,7 0,6 2,7 2,1 -0,6 -4,8 -2,2 -2,1 -1,5 0,2 0,7
Final Consumption (y-o-y) 0,0 0,1 -1,1 -0,4 -0,8 0,3 1,2 -0,7 -0,2 -1,3 -1,7 -0,9 -0,6
Private Consumption (y-o-y) 0,7 0,2 -1,1 0,7 0,9 0,7 1,7 -0,4 -1,0 -1,3 -1,8 -0,9 -0,3
Fixed Capital Formation (y-o-y) -2,7 0,9 4,4 2,8 3,4 10,2 0,2 -11,7 5,3 -2,7 0,3 10,2 10,0
Residential construction -52,2 -23,3 -8,0 -44,2 -52,3 -30,7 -8,1 -34,0 -16,5 -17,3 -9,8 -5,9 -3,1
Total GFCF excluding residential 8,8 3,3 5,3 12,3 14,1 15,6 1,0 -9,4 7,1 -1,6 1,2 11,4 10,8
Inventories * (contri bution to GDP) 1,3 -1,6 -0,2 0,6 3,1 0,7 -1,7 -2,9 -2,7 -0,7 0,0 0,0 0,0
Net exports (contri bution to GDP) -0,3 1,1 -0,1 0,7 -1,9 -1,8 1,5 3,2 1,4 0,8 0,0 -0,9 -0,2
Exports (y-o-y) 7,4 -3,8 -3,1 9,1 10,3 3,7 1,5 -10,5 -9,3 -11,7 -7,2 3,2 4,2
Imports (y-o-y) 7,8 -6,9 -2,8 6,0 16,2 9,3 -3,3 -19,8 -12,5 -12,8 -6,9 6,9 4,5
GDP deflator (% y-o-y) -2,3 -0,6 0,3 -0,8 -0,7 -0,4 -0,6 -0,9 -0,4 -0,1 -0,5 0,7 1,1
*also including
Source: EL.STAT.other
andstatistical discrepancies
NBG Research Estimates / Source: ELSTAT, NBG estimates

GDP declined by 1.4% y-o-y in Q1:2016, dragged down by

... which has been accompanied by frontloaded new fiscal
weaker domestic demand, against a backdrop of lengthy
measures to be implemented during 2016-2018 under the
negotiations for completing the 1st Review of the economic
medium-term fiscal strategy
support programme …
Composition of output growth by Primary balance & fiscal

expenditure component measures (as % of GDP)
7 3,5
4 % GDP
1
-2 2,0
-5
contributions in
-8
pps
-11 0,5
-14
2011:Q3
2012:Q1
2012:Q3
2013:Q1
2013:Q3
2014:Q1
2014:Q3
2015:Q1
2015:Q3
2016:Q1
2015
2016*
2017*
2018*
-1,0
Change in primary balance (%GDP)
Consumption Net Exports
Fiscal measures (% GDP)
Investment Inventories Primary balance (% of GDP)
Growth * Program targets
The fiscal drag in H2:2016 is estimated at -1.5% y-o-y, … net programme funding inflows to the economy of €4.3
however, the recessionary impact is expected to be bn (2.5% of GDP) until end-2016, mainly for clearing
mitigated by supportive confidence, liquidity (ECB’s government arrears, and c. €3.0bn (1.7% of GDP) of
decision on waiver) and base effects in conjunction with… additional structural funds in H2:2016
GDP growth: y-o-y and q-o-q Official funding inflows to the

6 forecasts
Greek economy: Government
3
y-o-y 2 arrears clearance and EU funds
0 0 4,0 % of GDP
-3 3,0
-2
2,0
-6
-4 1,0
-9 0,0
-12 -6 -1,0
2012:Q2
2009:Q2
2010:Q1
2010:Q4
2011:Q3
2013:Q1
2013:Q4
2014:Q3
2015:Q2
2016:Q1
2016:Q4
-2,0
H2:2015 H2:2016 2017-2018
Clearance of government arrears (neg. sign

GDP (q-o-q s.a., right axis) stands for new arrears accumulation)
GDP growth (s.a.,y-o-y, left axis) EU funds
Uncertainty about new fiscal measures and restrictive Lower demand and the weakening of GBP against the euro
liquidity conditions weighed on consumer sentiment following the Brexit referendum, are estimated to result in
despite the continuing improvement in the labor market an annual decline of Greece’s exports of goods and tourism
and the supportive impact of energy-driven deflation services to the UK of about 0.15% of GDP in 2016
Energy prices, headline inflation Greece's external linkages with the

& employment growth UK
2 % GDP, current prices
y-o-y y-o-y 50 1,5
6
40
3 30 1,5 1,3
0 20
1,1
-3 10 1
0 0,9
-6
-10 0,5
-9 -20 0,7
-12 -30
0 0,5
May-10
May-16
May-11
May-12
May-13
May-14
May-15
Nov-10
Nov-11
Nov-12
Nov-13
Nov-14
Nov-15
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016 June
CPI inflation (left axis)

Goods exports to the UK, left axis
Employment growth (left axis)
Gross tourism revenue - UK travelers, left axis
Energy Prices (right axis) EUR/GBP exch. Rate, right axis

Manufacturing production rebounded strongly in April Capacity utilization recovered to a 15-month high in April,
(+5.7%, y-o-y, s.a.) reflecting increasing production in suggesting that new investment will be forthcoming,
export-oriented sectors (food, tobacco, chemicals, metals especially in specific sub-sectors (e.g. food, beverages,
and non-metallic mineral products) tobacco)
Key sectoral contributions in PMI & Capacity utilization

11
industrial production growth 72
4 y-o-y 10
in pps 6
3 8 70
2 6 1
4 68
1
2 -4
0 66
0
-1 -9 64
-2
-2 -4 -14 62
-3 -6
-4 -8 -19 60
Feb-16
Feb-14
Feb-15
Dec-15
Dec-13
Dec-14
Oct-13
Apr-15
Jun-15
Apr-14
Jun-14
Aug-14
Oct-14
Aug-15
Oct-15
Apr-16
-24 58
May-13
May-16
May-12
May-14
May-15
Feb-16
Feb-12
Feb-13
Feb-14
Feb-15
Nov-11
Nov-12
Nov-13
Nov-14
Nov-15
Aug-11
Aug-12
Aug-13
Aug-14
Aug-15
Non-metallic minerals (in pps, left axis)
Food (in pps, left axis)
Beverages (in pps, left axis) PMI, deviat. from 50 (left axis)
Basic metals (in pps, left axis)
Chemicals (in pps, left axis) Capacity utilization (right axis)
Forward-looking indicators point to an expansion of Construction shows signs of recovery, supported by a timely
business activity in Q2:2016 -- driven by export/tourism- implementation of the public investment programme
oriented sectors (increase in PIP disbursements of 14.7% y-o-y in 5M:2016)
Public investment program (PIP)
Business, services and consumer
disbursements and construction
confidence indicators
30 -25 confidence
%
20 -10
-35
10 130
-45
0 -30 80
-10 -55 30
-20 -50 -20
-65
-30 -70
-75
-40 -70 -120
May-16
Jan-13
Sep-14
Feb-15
Jul-15
Dec-15
Nov-13
Apr-14
Aug-12
Jun-13
-50 -85
May-15
May-13
Feb-14
May-14
May-16
Feb-13
Feb-15
Feb-16
Nov-12
Aug-13
Nov-13
Aug-14
Nov-14
Aug-15
Nov-15
Construction Confidence (left axis)

Industrial confidence (left axis)
Services confidence (left axis) PIP Disbursements (y-o-y change, 3m moving
Consumer confidence (right axis) average, right axis)
Downside pressures on house prices eased in Q1:2016,

Improving sentiment, in conjunction with the prospective (-5.0% y-o-y vs -5.3% in Q4:2015), as did the fall in
normalization of liquidity conditions, following the commercial real estate prices (-1.5% in H2:2015). Tax and
completion of the 1st programme review, bode well for an liquidity factors and the still high supply overhang maintain
investment recovery, but also entail the main downside risk pressures on this market, with the cumulative fall in house
prices reaching -41.6% since the beginning of the crisis
Gross fixed capital formation and House & commercial prices
industrial confidence
% 5 y-o-y 10
26 6 5
18 0
10 -4 0
2 -5
-6 -14 -5
-14 -10
-22 -24 -10
-30
-38 -34 -15 -15
Q4:2004
Q1:2006
Q2:2007
Q3:2008
Q4:2009
Q1:2011
Q2:2012
Q3:2013
Q4:2014
Q1:2016
-20 -20
H2:2008
H1:2009
H2:2009
H1:2010
H2:2010
H1:2011
H2:2011
H1:2012
H2:2012
H1:2013
H2:2013
H1:2014
H2:2014
H1:2015
H2:2015
Q1:2016
Real fixed investment (y-o-y growth, left axis)

House prices (total, y-o-y)
Industrial Confidence (right axis) Office prices (Athens, y-o-y)
Retail prices (Athens, y-o-y)

The improved flexibility of the labor market and the near

The unemployment rate declined to a 3-year low of 24.1%
completion of business restructuring in key sectors -- such
in March 2016, notably in a period where seasonal support
as accommodation, food services, retail-wholesale trade
from tourism is absent, whereas employment increased by
and manufacturing -- underlie healthy employment growth
2.3% y-o-y s.a. in 3M:2016
of 2.3% y-o-y in Q1:2016 -- driven by wage earners
Employment trends per Employment growth &
employment category unemployment rate %
9 28
4 y-o-y
2 6 24
0 3 20
-2 0 16
-4 -3 12
-6 contribution in annual -6 8
change in
-8 employment in pps -9 4
-10 -12 0
2010:Q1
2010:Q4
2015:Q2
2007:Q1
2007:Q4
2008:Q3
2009:Q2
2011:Q3
2012:Q2
2013:Q1
2013:Q4
2014:Q3
2016:Q1
Q3:2009
Q1:2010
Q3:2010
Q1:2011
Q3:2011
Q1:2012
Q3:2012
Q1:2013
Q3:2013
Q1:2014
Q3:2014
Q1:2015
Q3:2015
Q1:2016
Wage earners Self employed Employment growth (left axis)
Wage earners (left axis)
Businessmen Family employees Unemployment rate (right axis)
Lower energy prices kept headline inflation in negative

In Q1:2016, the current account improved (-1.3% of GDP) as
territory in 5M:2016 (-1% y-o-y). However, the period of
the lower oil deficit (-0.3% of GDP y-o-y) and higher primary
deflation is expected to end in H2:2016 on the back of new
income balance (+0.6% of GDP y-o-y) offset the negative
increases in indirect taxes and higher energy prices. Core
impact from the sharp drop in export revenue from non-
inflation increased by 0.3% y-o-y in May reflecting, inter
tourism services (-40.9% y-o-y) due to capital controls and
alia, the inflationary impact of the VAT rate hike on July
low shipping freight prices (-22.2% y-o-y)
20th 2015 (an estimated +1.0% y-o-y in 5M:2015)
Headline & core inflation
Balance of Payments (as % GDP) 3 3
2015 2016 2 2
%, y-o-y
Q1 Q2 Q3 Q4 Q1 1 1
Current Account -1,8 -0,4 3,2 -1,0 -1,3 0 0
Non-oil Trade Balance -2,1 -2,1 -1,2 -2,0 -2,0 -1 -1

Non-oil Exports 2,5 2,7 2,5 2,6 2,5 -2 -2
Non-oil Imports 4,7 4,8 3,7 4,5 4,5 -3 May-16 -3
Mar-12
Jan-13
Sep-14
Feb-15
Jul-15
Dec-15
Nov-13
Apr-14
Aug-12
Jun-13
Oil Balance -0,7 -0,6 -0,6 -0,5 -0,3

Services Balance 0,7 2,7 5,1 1,0 0,4
Primary Income Balance 0,3 -0,3 -0,1 0,4 0,6 Contribution of fuel in CPI (in percentage points,
left axis)
Secondary Income Balance 0,0 -0,2 -0,1 0,0 0,1 CPI inflation (y-o-y change, right axis)
Capital account 0,3 0,1 0,0 0,8 0,4
Source: Bank of Greece Core inflation (y-o-y change, right axis)
Corporate credit declined by 0.6% y-o-y in April 2016 compared

Credit to the private sector declined by 1.9% y-o-y in April
with -1.2% y-o-y in December 2015, with a further contraction
(-2.0% in December 2015), with loans to households
in lending to shipping and industry sectors outweighing the
contracting by 2.9% y-o-y (-3.1% in December) increase in loans to construction (+1.2% y-o-y)
Bank lending to private sector Bank credit to export-oriented
sectors
y-o-y change 9% y-o-y
9%
32 32 6% 6%
3% 3%
22 22
0% 0%
12 12 -3% -3%
2 2 -6% -6%
-9% -9%
-8 -8
Q2:2006
Q1:2007
Q4:2007
Q3:2008
Q2:2009
Q1:2010
Q4:2010
Q3:2011
Q2:2012
Q1:2013
Q4:2013
Q3:2014
Q2:2015
Q1:2016
-12% -12%
Jan-14
Jul-13
Jul-14
Jan-15
Jul-15
Jan-16
Oct-13
Oct-15
Apr-14
Oct-14
Apr-15
Apr-16
Housing loans Industry Tourism

Credit to private sector
Loans to enterprises Agriculture Construction

The Greek banking system’s total financing from the

Private sector deposits are stabilizing, and the shift from
Eurosystem decreased further, by €11.8bn in 5M:2016 and
time to core deposits has ceased in 4M:2016. Deposits are
by €30.9bn cumulatively since June 2015, with the ELA
expected to pick up in the following months, supported by
dependence declining by €4.1bn between December 2015
tourism activity and net inflows of programme funding
and May 2016
Private sector deposits Greek banks' borrowing from the
3 capital 180
Eurosystem 40
controls
160
140 30
-2
120
100
monthly flows 20
-7 80
in bn
60
40 10
-12 20
May-16
Mar-15
May-15
Jan-16
Mar-16
Sep-15
Jul-15
Nov-15
0 0
May-10
May-11
May-12
May-13
May-14
May-15
May-16
Nov-09
Nov-10
Nov-11
Nov-12
Nov-13
Nov-14
Nov-15
Non-EA residents
Non-financial corporations ELA (left axis)
Households ECB (left axis)
Private sector deposits Eurosystem funding (% of total assets, right axis)
The Greek sovereign yield curve shows clear signs of … and the reinstatement of the ECB’s waiver on Greek
normalization following the successful completion of the 1st assets, albeit the result of the Brexit referendum led to a
review of the 3rd financial support programme in June… small widening of periphery bond spreads over bund
Greek Sovereign Yield Curve* 10y government bond spreads
70 over bund
60 PSI&2nd
Agreement
35 for further 35
50 MoU relief &
30 buyback 30
40
25 25
Agreement on a
30 new financing
20 programme 20
20
15 15
10
10 10
0
5 5
6m 3y 5y 10y 15y
0 0
September 15th, 2014
Apr-15
Nov-15
Mar-11
May-12
Feb-14
Sep-14
Dec-12
Jul-13
Oct-11
Jun-16
July 8th, 2015
June 16th, 2016
*Bloomberg and NBG Research interpolation/curve
fitting Greece Spain Portugal
A strong overperformance in State budget implementation The phasing-in of new fiscal measures in H2:2016 in
continues (primary surplus of 1.3% of GDP vs target of conjunction with the disbursement of programme funding
primary deficit of 0.5% of GDP for 5M 2016), reflecting will permit a further normalization in state budget
credible spending restraint (primary spending 1.2% of GDP implementation in the following months – normalization in
lower than 5M target) and improving tax revenue trends spending – and a shrinkage of government arrears (up
(+0.2% of GDP above the 5M target or +6.1% y-o-y) €0.8bn in 4M:2016) by more than €4bn by end 2016
Greece - State Budget Primary General government budget
balance trends (modified-cash basis)
3 3
5 bn euro 5
2 2
1 1
0 -1
-1 3 3
-2
-2 % GDP -3
-3
-4 2 2
-4
-5 -5
-6 -6
-7 -7 0 0
-8 *excluding SMP& ANFA revenue -8
-9 -9
-2 -2
-10 -10
Dec-14
Feb-15
Dec-15
Feb-16
Oct-14
Apr-15
Oct-15
Apr-16
Jun-14
Aug-14
Jun-15
Aug-15
Jan
Mar
May
Feb
Jul
Sep
Dec
Oct
Apr
Jun
Aug
Nov
2012 2011 2010 State budget primary balance

2009 2013* 2014*
Rest of Gen.Government balance
2015* 2016*

Greece: Dates to Watch
June
2 7 16/17 22 24 28-29
ECB €280mn Eurogroup ECB Governing
Moody's credit European
Governing IMF meeting/ECOFIN Council: non-
rating review for Council
Council repayment finance ministers’ monetary policy
Greece meeting
meeting due meeting meeting
July
6 11 13 20 21 22
ECB Governing
€430mn IMF €2.3bn ECB Governing S&P credit
Council: non- Eurogroup
repayment ECB/Eurosystem Council: monetary rating review
monetary meeting
due repayment due policy meeting for Greece
policy meeting
August
3 12
ECB Governing Council: non-monetary policy EL.STAT. release: Quarterly National Accounts
meeting (Q2:2016)
September
2 7 8 9 19 21
ECB Governing
Fitch’s credit
€283mn IMF ECB Governing Eurogroup €137mn IMF Council: non-
rating review
repayment due Council meeting meeting repayment due monetary policy
for Greece
meeting
October
5 7-9 10 14 20 20-21
ECB Governing Council:
ECB Governing IMF/World Moody's monetary policy
Council: non- Bank Eurogroup credit rating meeting/ EL.STAT. European
monetary annual meeting review for release: General Council meeting
policy meeting meetings Greece government deficit and
debt 2015

Greek Economy: Selected Indicators

2014 2015 2016 2016f
year year
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Most recent
aver. aver.
Real sector (y-o-y period average, constant prices)
GDP 0,4 0,2 1,3 0,9 0,7 0,4 0,9 -1,7 -0,9 -0,3 -1,4 Q1:16 -1,4 -0,8
Domestic demand -1,1 1,7 0,6 2,7 1,0 2,1 -0,6 -4,8 -2,2 -1,4 -2,1 Q1:16 -2,1 -0,7
Final Consumption 0,9 0,2 -0,4 -0,8 0,0 0,3 1,2 -0,7 -0,2 0,1 -1,3 Q1:16 -1,3 -1,1
Gross fixed capital formation -8,9 -7,6 2,8 3,4 -2,7 10,2 0,2 -11,7 5,3 0,9 -2,7 Q1:16 -2,7 4,4
Exports of goods and services 5,3 4,7 9,1 10,3 7,4 3,7 1,5 -10,5 -9,3 -3,8 -11,7 Q1:16 -11,7 -3,1
Imports of goods and services -0,2 9,7 6,0 16,2 7,8 9,3 -3,3 -19,8 -12,5 -6,9 -12,8 Q1:16 -12,8 -2,8
Coincident and leading indicators (period average)
Retail sales volume (y-o-y) -3,1 0,1 1,6 -0,3 -0,4 0,0 0,6 -4,2 -2,1 -1,5 -3,4 Mar -1,6 …
Retail confidence (15-yr. average: -1,5) -10,0 -4,9 3,0 6,7 -1,3 -3,0 -1,3 -25,6 -11,1 -10,3 0,9 May 5,1 …
Car registrations (y-o-y) 21,3 36,0 31,5 30,9 30,1 19,2 33,2 -2,2 2,1 13,8 -0,3 Apr 25,5 …
Consumer confidence (15-yr. average: -43,4) -61,3 -50,3 -52,7 -51,6 -54,0 -37,0 -43,6 -60,6 -61,6 -50,7 -67,5 May -71,9 …
Industrial production (y-o-y) -2,1 -2,8 -2,9 0,1 -1,9 2,5 -2,8 1,2 2,0 0,7 -0,7 Apr 2,8 …
Manufacturing production (y-o-y) 0,6 -0,4 1,8 5,3 1,8 5,9 -1,0 -0,8 1,4 1,3 1,4 Apr 5,8 …
Capacity Utilization (15-yr. average: 72,8) 66,3 68,5 69,0 68,8 68,2 67,1 67,0 62,0 65,2 65,3 65,9 Apr 68,6 …
Industrial confidence (15-yr. average: -6,1) -7,5 -4,2 -1,2 -0,8 -3,4 -9,1 -14,0 -26,6 -16,6 -16,6 -9,4 May -11,6 …
PMI Manufacturing (base=50) 50,7 50,5 49,1 49,1 49,9 48,5 47,1 37,5 48,5 45,4 49,1 Apr 49,7 …
Construction permits (y-o-y) -17,0 17,4 -11,2 -12,3 -5,7 29,2 -5,6 -22,4 5,9 -0,3 -11,9 Mar -34,8 …
Construction confidence (15-yr. average: -21,9) -20,0 -19,8 -24,5 -24,0 -22,1 -33,9 -44,8 -60,9 -48,5 -47,0 -37,1 May -39,0 …
PIP Disbursements (y-o-y) 91,7 11,7 29,3 -24,2 -0,9 -40,9 -57,6 -21,0 43,9 -2,8 7,0 Apr 21,6 …
Stock of finished goods (15-yr. average: 12,2) 6,7 3,2 4,4 6,4 5,2 13,0 15,0 17,4 15,3 15,2 12,5 May 9,9 …
External sector (period average)
Current account balance (% of GDP) -1,1 -1,0 2,1 -2,2 -2,1 -1,8 -0,4 3,2 -1,0 -0,1 -1,3 Q1:16 -1,3 0,5
Current account balance (EUR mn) -1985 -1739 3777 -3821 -3767 -3214 -669 5559 -1773 -98 -2255 Q1:16 -2255 …
Services balance, net (EUR mn) 1625 4462 9628 2558 18273 1297 4757 9062 1816 16932 730 Q1:16 730 …
Primary Income Balance, net (EUR mn) 1416 -475 -186 -182 574 557 -494 -104 780 739 1045 Q1:16 1045 …
Merchandise exports-- non-oil (y-o-y cum.) -3,0 -1,3 0,2 1,9 1,9 10,0 5,2 -2,2 -4,3 -9,5 -1,1 Q1:16 -1,1 …
Merchandise imports-- non-oil (y-o-y cum.) 2,7 8,9 7,8 7,9 7,9 4,6 -7,1 -19,6 -8,7 -18,2 -3,3 Q1:16 -3,3 …
Gross tourism revenue (y-o-y) 17,3 8,6 11,5 4,4 10,2 9,4 9,5 5,2 -3,9 5,5 -0,1 Q1:16 -0,1 …
International tourist arrivals (y-o-y) 16,0 15,5 25,8 27,7 23,0 45,6 15,0 2,6 -2,1 7,1 -6,2 Q1:16 -6,2 …
Employment
Unemployment rate 27,0 26,9 26,2 26,0 26,5 25,8 25,1 24,8 24,4 25,0 24,3 Mar 24,1 24,1
Employment growth (y-o-y) -0,8 0,2 1,3 1,5 0,6 0,9 2,1 2,1 2,7 2,0 2,3 Mar 2,5 1,9
Prices (y-o-y period average)
Headline inflation -1,3 -1,5 -0,6 -1,8 -1,3 -2,4 -2,1 -1,8 -0,6 -1,7 -0,9 May -0,9 0,0
Core inflation -1,0 -1,2 -0,1 -0,7 -0,8 -0,7 -0,9 -0,5 0,3 -0,5 0,2 May 0,3 0,8
Producer prices excl.energy -0,7 -0,7 -0,6 -0,1 -0,5 -0,1 0,2 0,2 -0,2 0,0 -0,6 Mar -0,7 …
Fiscal policy
Gov. deficit/GDP (excl banking system support&SMP/ANFA revenue) … … … … -3,7 … … … … -3,1 … … … -2,7
Government debt/GDP … … … … 180,1 … … … … 176,9 … … … 182,0
Revenues--Ordinary budget (cum. % change) 4,7 3,9 1,0 -3,5 -3,5 -1,8 -5,7 -6,7 -0,8 -0,8 4,4 May 2,5 …
Expenditure--Ordinary budget (cum. % change) -7,3 -8,2 -7,0 -6,4 -6,4 -2,2 -6,7 -5,3 0,2 0,2 -2,3 May -0,8 …
Monetary sector (y-o-y, end of period)
Total deposits -3,4 1,0 0,3 -2,0 -2,0 -14,4 -26,8 -27,1 -24,9 -24,9 -15,0 May -9,2 …
Loans to private sector (incl. sec. & bond loans) -4,1 -3,5 -3,5 -3,1 -3,1 -2,5 -1,7 -1,5 -2,0 -2,0 -2,1 May -2,0 …
Mortgage loans (including securitized loans) -3,4 -3,2 -3,1 -3,0 -3,0 -3,3 -3,4 -3,5 -3,5 -3,5 -3,4 May -3,3 …
Consumer credit (including securitized loans) -3,4 -2,7 -2,5 -2,8 -2,8 -2,5 -2,3 -2,8 -2,3 -2,3 -1,7 May -1,4 …
Interest rates (period average)
10-year government bond yield 7,5 6,2 6,0 8,0 6,9 10,0 11,6 10,8 7,9 10,1 9,5 May 7,7 …
Spread between 10 year and bunds (bps) 586 473 493 719 568 967 1112 1011 730 955 919 May 754 …
Exchange rates (period average)
USD/euro 1,37 1,37 1,33 1,25 1,33 1,13 1,11 1,11 1,10 1,11 1,10 May 1,13 …
Sources: BoG, NSSG, MoF, ASE,NBG,Bloomberg

GREECE
Macro View
June 2016
NA TI ON A L B AN K
OF GR E E C E
This Bulletin can be viewed at: https://www.nbg.gr/en/the-group/press-office/e-spot/reports
Editor: P. Mylonas, Deputy CEO, Head of Research, e-mail: pmylonas@nbg.gr Tel: (+30210) 3341521, FAX: (+30210) 3341702.
Main contributors to this issue (in alphabetical order): E. Alevizopoulou, A. Gouveli, N. Magginas, G. Murphy, P. Nikolitsa.
This analysis is provided solely for the information of professional investors who are expected to make their own investment
decisions without undue reliance on its contents. Under no circumstances is it to be used or considered as an offer to sell, or a
solicitation of any offer to buy. Any data provided in this bulletin has been obtained from sources believed to be reliable.
Because of the possibility of error on the part of such sources, National Bank of Greece does not guarantee the accuracy,
timeliness or usefulness of any information. The National Bank of Greece and its affiliate companies accept no liability for any
direct or consequential loss arising from any use of this report.
Note: The Bulletin analysis is based on data up to June 22, 2016, unless otherwise indicated

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NATIONAL BANK OF GREECE | Greece: Macro View | July 2014

 Tourism has increased strongly since 2011, showing notable resilience

 The increase in value added reflects higher output as well as lower

Direct contribution of international tourism to GDP

(+30210) 334 1521

Sources: National Accounts, balance of payments data and NBG estimates

NBG Economic Analysis Department

 Profitability in the tourism sector has also increased notably in recent

 Based on World Travel & Tourism Council (WTTC) long-term projections

 As a result of the higher demand -- and the increased capacity -- the

Greece: Economic & Market Analysis | June 2016| p. 2

THE TOURISM SECTOR PROVIDES MUCH STRONGER-

growth in recent years is significantly larger than the above numbers

accommodation facilities/entities, as well as catering services in

GREECE | NBG Macro View |June 2016| p. 3

GREECE | NBG Macro View |June 2016| p. 4

10 The increase in output reflects, inter alia, the improving capacity of

infrastructure also occurred in recent years, with the proportion

GREECE | NBG Macro View |June 2016| p. 5

units in the provision of more competitive and value-generating

respectively, in 2015. These markets, along with the euro area

GREECE | NBG Macro View |June 2016| p. 6

of facilities and auxiliary services (e.g. transportation,

Ground & port

Air transport Prioritization of

residents, the estimated decline in the intermediate expenditure for

Sources: WEF, Eurostat, HCH, BoG

GREECE | NBG Macro View |June 2016| p. 7

This reduction in production costs reflects a change in the structure

a significant role in supporting productive efficiency as reflected in

security, personnel hiring).

GREECE | NBG Macro View |June 2016| p. 8

developments is estimated at 0.8% per year, as regards the

extract the change in the composition of inputs in the sector between

of goods are used to estimate spending on these inputs in the years

import categories corresponds to the average monthly spending in

GREECE | NBG Macro View |June 2016| p. 9

the estimated import spending of residents for this period. In this

GREECE | NBG Macro View |June 2016| p. 10

of Spain and Portugal. The above trends clearly reveal the

Mixed income Gross operating surplus

GDP) in new hotel capacity will be needed in the years 2017-2023

GREECE | NBG Macro View |June 2016| p. 11

which is analogous to the average of Spain and Portugal) and

demand for tourism services (+3% per annual in 2017-2023) is

GREECE | NBG Macro View |June 2016| p. 12

Mild recession continues in Q1:2016 – positive confidence and

Latest indicators suggest

GREECE | NBG Macro View | June 2016

Greece: Tracking the economy’s cyclical position

Imports (other (excl.oil&shipping) y-o-y 6m mov.avg -3 8 17 22 31 36 32 35 33 37 37 27 24 16 10 6 2 4 3 5 6 7 8 8 9 10 10 9 8 2 -1 -5 -6 -8 -10 -6 -4 -3 -2

Color map scale 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27

Greece: Growth Outlook

GREECE | NBG Macro View |June 2016| p. 14

GDP declined by 1.4% y-o-y in Q1:2016, dragged down by

Composition of output growth by Primary balance & fiscal

GDP growth: y-o-y and q-o-q Official funding inflows to the

Clearance of government arrears (neg. sign

GDP growth (s.a.,y-o-y, left axis) EU funds

Energy prices, headline inflation Greece's external linkages with the

CPI inflation (left axis)

GREECE | NBG Macro View |June 2016| p. 15

Key sectoral contributions in PMI & Capacity utilization

Construction Confidence (left axis)