The fact that consumption is stable despite stable wages and high prices means Greeks are using their savings. Is Findings Shared with K by OECD Senior Economist Tim Bullman. He sees a high level of concentration in the Greek market, despite being dominated by very small businesses, and cites the Competition Commission, which he describes as a useful tool. Through Bulman, the OECD considers it important that Greece sends a signal to investors that the election cycle will not affect its economic course, and “sees” a window of opportunity for debt through locked interest rates if the Greek state maintains a primary surplus of 1.5% of GDP in the coming years. Prices in Greece are only approaching the eurozone average, according to the OECD, and wages should now follow productivity gains. In terms of justice, he sees it as catalytic that cases are closed before they get to court, with mediation procedures. This is a matter of organization and management, not financing, of the national health system. In order to increase the supply of real estate through empty houses and incentives for construction, he recommends “something new in Greece” regarding the housing issue.

– Growth in Greece in 2022 was remarkable given the international environment and monetary tightening. Particularly noteworthy is the fact that throughout this period, the rise in prices in Greece did not stop the growth in consumption. In the fourth quarter of 2022, private consumption increased by 1.9%. This is impressive considering what has happened to consumer prices. This is partly due to the revival in the labor market and government measures to support the income of the population. In 2023, we find that consumption is stable despite the fact that wages have not risen much. This means that consumers in Greece are now using their deposits, which were increased during the COVID period. We expect the situation to change over time and we will see some reduction in consumption. Here we should note that the problem that all countries will face under the Recovery Fund is that the cost of investment has increased due to the increase in the cost of building materials.

– An interesting story for Greece in recent years is that in addition to its exports from sectors such as tourism and shipping, we are also seeing an increase in exports in sectors such as small industry, pharmaceuticals, specialized equipment or metal products, which are starting to produce. factories in Greece. And this marks an improvement in the country’s competitiveness in previous years. This is partly due to the modest payroll costs we have seen over the past decade, as well as the improvement in the business environment. Greece has become an easier place to invest.

It is noteworthy that throughout this period, rising prices did not stop the increase in consumption.

– If, whoever the government is, Greece sticks to existing plans and returns to modest primary surpluses and thus manages to restore investment levels, this will be one of the best ways to show that it is moving in the right direction, despite the elections. cycle. Maintain consensus on fiscal policy. And strengthen consensus on a reform agenda that runs until 2026. It is important for Greece that investors see that even in the electoral cycle, things are moving in the right direction.

– Government debt as a percentage of GDP in Greece has fallen by the largest amount we have seen in any other OECD country. But it is still the second largest after Japan. Fiscal policy needs attention. Greece now has the opportunity to cut its debt sharply as interest rates have risen worldwide, but Greek debt is pegged to fixed interest rates for the next 10 to 20 years. This is not an immediate threat, but it should be addressed now. And if we look at it in terms of the fiscal target, we will definitely have a primary surplus averaging 1.5% of GDP over the next few years.

– The price level in Greece is actually approaching the average for the Eurozone. The flip side of the real purchasing power of consumers is, as you said, wages. The minimum wage has increased. Average wages have not increased much and are at the bottom of OECD countries. The best way to boost wages is through productivity through investment and the business environment.

Much remains to be done in the judiciary

– It’s kind of ironic that although Greece is dominated by very small businesses, we also see a high concentration in the Greek market. There are sectors in Greece where there are very few players. For example, retail, banks or telecommunications. Consequently, they have more power, and hence a larger price margin. One of your best tools, of course, is the Hellenic Competition Commission. And, of course, improving the business environment so that Greece becomes more competitive and thus makes more use of the fact that it is a member of Europe.

– This is something completely new. A year ago, prices began to move, but they did not indicate what we saw next. If we look at the statistics, Greece ranks very well in terms of housing index per capita. Many of them, of course, are declared empty, either because they are empty or because they are on the black market. Others are used as vacation homes or second homes, etc. So when you have a stable supply of real estate and parallel access to credit and investment, then you have price increases. In other words, the existing real estate fund becomes more expensive. It should be noted here that real estate prices in Greece have been low in previous years. We are now seeing life returning to the Greek real estate market at a particularly rapid pace. The best way to deal with this is to increase supply in the market by taking advantage of vacant or underutilized properties. And also to facilitate the repair and construction of houses.

– This is the area where the least work has been done to improve the business environment. However, some progress has already been made and much remains to be done – see digitalization, training of judges and advanced training of judges. However, much remains to be done. For Greece, it is a catalyst for resolving cases before they go to court, through mediation procedures. In addition, it should also apply to the judiciary of the broader reforms it is implementing throughout the public administration. One problem here is that the courts want their independence, they don’t like it when someone interferes in their affairs. However, their work will be helped by the integration of digitization, which is now also found in other areas of public administration.

– If you look at Greece’s public health spending, it’s slightly below the OECD average. This is about the same level as in 2010. So it remains to be seen how this money will be used in practice. Public procurement has always been a major problem for Greece. More broadly, there is room for improvement at the organizational level of the Greek health care system.