THE embattled Greek economy, which imploded in 2010 amid a sovereign debt crisis, is showing positive signs of improvement.
Nikos Mavrikos had to fire half of his staff, leaving his ship supply business based in Piraeus – Greece’s and perhaps Europe’s busiest port – on the verge of collapse. Now, he has hired his first new employee in four years.
“People are slowly starting to trust Greece again,” said Mr Mavrikos, who hopes to take on even more employees soon.
A bailout deal, with austerity conditions, put in place by the European Union and the International Monetary Fund to stop Greece defaulting, and exiting the euro, is set to end this year.
Yesterday, Greece sold six-month treasury bills at its lowest borrowing cost since the crisis began. And it is planning to return to the international bond markets for the first time in four years today with a sale of a five-year euro bond.
“The image of Greece abroad has changed dramatically. Now sentiment is changing in Greece as well,” Greek prime minister Antonis Samaras said. “We are now at the edge where unemployment has stopped rising, no more people are being fired, and there are some very positive indications of new hires.”
But experts say for all the green shoots, it is too early to talk about long-term stability.
Thousands of businesses closed across Greece last year. Unemployment is nearly 28 per cent, with youth unemployment at almost 60 per cent.
Strikes against austerity also continue to erupt sporadically.
Greece’s debt is still a massive 175 per cent of output, and meeting a target to reduce that to 110 per cent by 2020 will be difficult without economic growth.
In its latest report on Greece in November, the Organisation for Economic Cooperation and Development said the bailout had not yet led to recovery. “Restoring growth, making it sustainable and dealing with social costs is essential,” the OECD said.
Mimis Vanos, who runs one of the biggest marine supply companies in Greece, says the problems that have plagued Greece’s economy for decades – including corruption, tax evasion and barriers to competition – have yet to be solved. He also said bank credit remains tight. “For the last 50 years I’ve been hearing that things are changing in Greece,” said Mr Vanos. “I’ll believe it when I see it.
Greece’s economy is the most dependent on bank lending in the Eurozone, with bank credit to the private sector making up 40 per cent of total funding in 2000-08 against 33 per cent across the single currency bloc.
But bank credit to the private sector has been in decline since 2011, aggravating the six-year economic slump.
Prospects of a mild economic recovery this year will largely depend on new lending.
According to the latest Bank of Greece data, lending to the private sector shrank 4 per cent year-on-year, while loans to businesses dropped 5.2 per cent.
The port of Piraeus has long been a benchmark of the wider Greek economy. Its marine supply firms, many of them small and family-run, have suffered brutally during the crisis.
The Hellenic Ship Suppliers Association said 40 per cent of its members had gone bust since 2010. But last year, passenger traffic in Piraeus rose 11.1 per cent from 2012, and there was a 3.7 per cent increase in container ships on the Asia-Europe route. Greek supplies to EU-flagged ships improved considerably.
Now foreign businesses are accepting bank guarantees rather than demanding cash on the barrel.
Mr Mavrikos added: “That’s given us breathing space. It means we can import goods, we can pay our bills.”