European Commission: Greece’s competitiveness is modest but improving

Greece is classified in the third group of EU Member States with modest but improving competitiveness, according to the annual report entitled “Progress in industrial competitiveness per EU country” that was released today in Brussels.

In the same group we also find Estonia, Lithuania, Spain, Latvia, the Czech Republic, Hungary, Poland, Portugal, Romania and Slovakia.

The classification is based on the performance of the Member states in regard to competitiveness. More specifically, four groups emerge:

– Member States with high and improving competitiveness: the Netherlands, Germany, Denmark and Ireland.
– Member States with high but stagnating or declining competitiveness: Belgium, the United Kingdom, Austria, France, Italy, Luxembourg, Sweden and Finland.
– Member States with modest but improving competitiveness: Estonia, Lithuania, Spain, Latvia, Czech Republic, Hungary, Poland, Portugal, Romania, Slovakia and Greece.
– Member States with modest and stagnating or declining competitiveness: Slovenia, Bulgaria, Croatia, Malta and Cyprus.

In a separate chapter of the report on Greece’s competitiveness, it is stressed that, although the prolonged recession has severely affected the Greek economy, statistical data show that Greece is returning to growth in 2014.

More specifically, the report mentions the following: “Confidence indicators continue to improve and structural reforms have improved competitiveness. The Economic Adjustment Programme has reduced macroeconomic and fiscal imbalances. The recovery is forecast to gain strength in 2015, but full implementation of the adjustment programme continues to be crucial to consolidate recent progress. The robust improvement of the tourism sector has helped the economy. The repayment of government arrears and substantial absorption of EU funds, through major EU-funded construction projects, have had a positive impact on investments. For example, work has started on fourlarge motorways with a combined value of over EUR 7 billion.”

Regarding access to finance and investment, the chapter on Greece mentions that the banking sector is being capitalised to ensure that it is in a better position to support the growth of the economy.

However, the sector is still reluctant to provide finance to small and medium-sized enterprises (SMEs). Only 33 % of Greek SMEs obtained the financing they sought in 2013 (EU: 65%). Access to finance is the most pressing problem for 32 % of SMEs (EU: 15 %). Bank lending to the corporate sector is still constrained, making it difficult to finance production and investment. One of the most important financial issues for SMEs is the refinancing of existing exposure.

The government’s efforts to ease financing conditions have focused on the lending of the European Investment Bank (EIB) to Greek commercial banks so that they in turn can lend to SMEs, and on providing banks with risk-sharing. In 2013, four finance contracts worth EUR 300 million were signed via the Guarantee Fund for SMEs.