Greece is enjoying a healthy economic performance in 2022, with Greek think tank the IOBE forecasting growth of 6% for the year. Yet the country is still feeling the long-term impacts of the 2008 global financial crisis. In August 2022, Greece’s GDP still sat approximately 25% below its pre-crisis peak.
Alongside grappling with the wider impacts of the financial crisis, Greece was also mired in a debt crisis. It was revealed in 2004 that the Greek government had been misrepresenting its budget deficit before joining the euro.
In 2010, Eurostat – an EU statistics agency – found severe irregularities in the economic data provided by Greece. This resulted in the reported 2009 deficit of 4.7% being revised to 13.6% in 2010. The European Commission, the European Central Bank and the International Monetary Fund bailed out the country, leading to the implementation of severe austerity measures.
Now, 12 years after the bailout, the economic outlook is looking much more positive, thanks to an injection of tourism following the Covid-19 pandemic, a residence by investment golden visa programme and a drive to increase foreign direct investment (FDI).
Ioannis Smyrlis, the secretary-general for international economic relations and openness and president of Enterprise Greece (an investment promotion agency), says FDI inflows to Greece reached $5bn (€5.04bn) in 2021, the largest sum since 2002.
So has Greece now turned the page on its debt crisis? If so, what opportunities does the country now offer to global investors?
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Greece’s record-breaking tourism
Excluding the years impacted by Covid-19, Greece hosts approximately 20 million international tourists annually, making it the seventh most visited country in the EU and 16th in the world.
Marinos Giannopoulos, CEO of Enterprise Greece, says: “The prosperity of Greece has been tied to the development of tourism, which has been one mainstay of economic growth and employment. 2022 is expected to be a record year for the Greek tourism industry as we expect to top the record 33.1 million visitor arrivals number, which was set in 2019.”
Giannopoulos points to a rich cultural heritage, natural beauty and geographical variety as key reasons for Greece’s strong allure to tourists.
“Tourism has made a dynamic recovery this year with inbound traveller numbers up 121.8% between January and August, generating €12.71bn,” says Giannopoulous. “This is not surprising, as in August we welcomed one million tourists per week to our country.”
Indeed, tourism is a key driver of Greece’s high-performing stats in 2022, with revenue from tourism more than doubling in the first half of 2022 – up 147% year-on-year, despite high inflation.
Despite tourism being a consistently high-performing sector for Greece, the country is keen to diversify its economy. This will prove crucial for continued economic success, given that the 2023 forecast is less robust. According to the IOBE, economic growth is expected to sit at 1.6% in 2023, below the Greek government’s projection of 2.1%.
Investor opportunities in Greece
Besides tourism, Giannopoulos highlights several other promising sectors for investors within the Greek economy, including energy, ICT and life sciences and pharmaceuticals.
Greece has lofty sustainability ambitions, with the aim to have 70% of the country’s energy budget run on renewables by 2030. Giannopoulos mentions wind, hydro, biomass, geothermal and solar as key subsectors that are seeing investment as part of larger EU infrastructure projects.
In April 2022, Greece installed the largest solar power plant in the eastern Mediterranean, and one of the largest in Europe. The $130m photovoltaic – a type of solar energy conversion – facility can generate enough electricity to power 75,000 households and is forecasted to reduce Greece’s emissions by more than 300,000 tonnes per year.
In terms of ICT, Giannopoulos explains that the Greek government is trying to cultivate the sector by supporting ICT initiatives through establishing incubators, research and development (R&D) centres and co-working spaces.
This evolution into smart sectors is also bolstering the life sciences sector. Eurostat data shows that 8% of the total private investment in R&D in Greece comes from the pharma industry, with more than 150 pharmaceutical companies developing, manufacturing and exporting pharmaceuticals around the globe from Greece.
Higher threshold for golden visas in Greece
A key investment initiative offered by Greece has been its golden visa programme, launched in 2013. The programme made wealthy foreign citizens eligible to acquire residency in the Hellenic Republic by investing at least $250,000.
The programme is expected to change in 2023 after the Greek government confirmed that it would be doubling the minimum investment required for the issuance of a golden visa to $500,000. Greek Prime Minister Kyriakos Mitsotakis explained that this decision was taken in order to make real estate more affordable to Greeks. The Greek government has also pledged various funding initiatives to help young Greeks buy property.
Against the backdrop of a looming global recession, the recent rebound in the economy of Greece is a rare positive story for a country that has struggled economically over the last decade.
Greece will be hoping that it can continue to grow its booming tourist economy, while attracting enough new investments into renewable energy and other emerging business sectors to keep its economy growing, albeit at a slower rate, in 2023.