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Monday, May 7th, 2001
The Pierre Hotel, New York City
 

 

"A New Era for Greek Businesses, Challenges and Opportunities"

Ladies and Gentlemen,

It is my pleasure to speak to you today on the challenging opportunities facing Greek businesses in the years ahead in this important occasion of the "5th Annual Capital Link Forum".

By hosting the 2004 Olympic Games, Athens will be in the spotlight in the next several years much like Olympia was during the Olympic Games in Ancient Times. Yet, what it may be less obvious is the fact that this period ahead also coincides with the efforts of Greek businesses to succeed in the marketplace and play an increasingly important role in the global markets.

Since ancient times the small coastal area that Greece occupies forced Greeks to constantly search for new places, discover new trading routes, develop commerce and shipping and establish thriving communities all over the world.

In modern times, after two World Wars and a Civil War, Greece began to develop its industrial infrastructure and experienced tremendous growth during 1960īs. However, this growth suffered seriously in the highly inflationary period of the 1970īs and 1980īs. During these two decades the economy continued its nominal growth but at the expense of key macroeconomic factors, such as large government deficits, large public and foreign debt high inflation and trade deficits. To control the outflow of money, the governments set up firm restrictions in capital movements, and regulated interest rates, the banking system and capital markets. Furthermore, failed companies were not allowed to go bankrupt and were taken over by the state, thus creating a large public sector at the expense of private sector growth. Meanwhile, an elaborous process was set up by the Government to provide subsidies or investment incentives to activities that were not market driven, again at the expense of the private sector. As a result, this highly regulated environment led to significant misallocation of resources and decreases in domestic and foreign direct investment.

The overall negative business conditions started turning around by early 1990īs. During that time there was a political momentum to push forward with economic reforms, and banking and capital markets deregulation so that Greece could move towards Europe rather than against it, as it happened during 1980s. The 1992 Maastricht Treaty forced the Greek Governments to implement and pursue a strict fiscal/monetary austerity plan. In less than a decade, the Greek economy went back to business as never before accomplishing remarkable growth and improvements. Some of the economic measures speak for themselves:

 
.
1990
1995
1997
2000
Inflation Rate
20.4%
9.3%
5.5%
3%
Treasury Bill Rate
20%
17.50%
11.2%
4.6%
GDP per Capita (USD)
.
11,101
11,438
12,000
GDP Growth Rate
.
2.1%
3.4%
4.1%
Budget Deficit (%GDP)
.
10.6%
3.9%
0.8%
Public Debt (%GDP)
.
111.3%
109.4%
101%
Rate of Productivity Change
.
0.4%
3.7%
2.2%

This remarkable macroeconomic improvement has received high praises both in the European Union and the US and was dubbed a small financial miracle that allowed Greece to become a member of Eurozone on January 1st, 2001.

Today Greece has a GDP in excess of US$120bn, total savings exceeding US$85bn, a stock market with a total capitalisation of US$110bn and is considered by the Economist as the 19th most developed country in the world in terms of Economy, culture and standard of living.

Greece's successful entrance to Eurozone opens a new era of opportunities and challenges for businesses and the government for a number of reasons.

First of all, by entering the Eurozone Greece's macroeconomic environment has seen a tremendous improvement. Holding Euro, a strong, international currency and facing low interest rates, both consumers and businesses can plan their purchases and investments better and without the excessive currency risks or high inflation thus pushing the GDP growth to about 5% for at least the next several years.

Second, being in the Eurozone, Greece must adhere to economic policies that keep inflation low, reduce public and foreign debt and diminish government deficits. These requirements guarantee the discipline in fiscal policies and lead to a more efficient government capable of reducing taxes and promoting investments.

Third, besides the above fiscal discipline, the government must ensure that Greek markets are fully accessible, liberalized and deregulated and with the public sector being fully restructured and privatized. All the above aim to increase productivity and efficiency in the economy.

Finally, the government is forced to find solutions to chronic structural problems in a more proactive manner. Such is the case with the public pension system, the viability of which is currently being addressed earlier than otherwise would. Addressing future problems on an early stage results in great benefits for the economy through the added efficiency and the improvement in the political decision-making process.

The above significant policy guidelines besides setting a stable course for the Greek economy, more importantly, unleash the power of Greek businesses amid a number of challenges and opportunities for its success:

  • First of all, Greek businesses have excelled in a long survival course with high inflation and interest rates as well as high currency risk. The elimination of these factors today gives Greek businesses an edge to compete with European counterparts that had been operating in a favorable macroeconomic environment for years.
  • Second, the liberalization of capital markets allows many aspiring Greek corporations to find easier access to share capital to finance their ambitious investment plans and to strengthen their capital base. This development in conjunction with low interest rates has reduced costs, increased profitability and allowed the undertaking of additional investment projects.
  • Third, most Greek companies are small to medium size compared to international giants, a situation that has both advantages and disadvantages. Being small makes enterprises move flexible, and gives them speedy decision-making processes to undertake risky projects and to adjust their strategies to a constantly changing business environment. Besides, they can fill the gap that large global organisations leave by offering niche products targeting their goods and services to their clientsī specific needs. On the other hand, small enterprises may have higher cost of capital than their large counterparts. Yet, as I mentioned before, the Athens Stock Exchange still remains a relatively less expensive source of capital for Greek businesses.
  • Fourth, besides the small enterprises, there is a good number of Greek companies playing leading roles in their respective industries, creating know-how, offering and marketing innovative products. These companies aim to further strengthen their market position by rigorously pursuing restructuring through mergers, acquisitions, and consolidations. Large companies have emerged in most industries (like banking, insurance, heavy metal, construction, food and beverages, retail, passenger ferry and other sectors), still flexible in their decision making process but more able to compete effectively and in a longer range.
  • Fifth, Greece's geopolitical position has endowed Greek companies with a windfall opportunity. Greece is situated among a number of countries that only recently began liberalizing their economies. Being the only European Union member in the region, Greece is looked upon as a model of economic growth, political stability, and business success. As a result, a large number of Greek enterprises find fertile ground and already have expanded their manufacturing and commercial base in these countries. Besides commerce, such activities include telecommunication networks, energy projects, food manufacturing, supermarkets/other retail distribution networks, mining, banking, etc.
  • Finally, the picture of the Greek business environment cannot complete unless we add the dynamic character of the Greek businessmen. Again and again we see an increasing number of Greek companies solidifying their presence not only in neighboring countries but in the greater region of the Mediterranean, the Middle East and especially the Black Sea and Russia much the way Greek entrepreneurs did a century ago. More so nowadays, with the wings of change and opportunities brought by the Eurozone membership, Greek companies and their products compete successfully as far as Portugal, Great Britain, Germany, and Sweden.

It is clear that today's environment provides Greek businesses with the opportunity, to prove right analysts around the world who claim that Greece is today one of the most attractive places to invest.

Ladies and Gentlemen,

Without any doubt, the 2004 Olympic Games in Athens will offer the next opportunity to watch the best world athletes in a setup filled with culture and civilization. The Greek Business community looks forward to this unique event as a major challenge to increase the world's awareness for the high quality of goods and services they provide and to show the abundant opportunities for investments and business collaboration.