Athens Digest 02.04.2019

• Central bank sounds warning on growth, reforms, and recovery

• Strong consumer confidence offset by industry gloom

• Balkan Milestone: PM Alexis Tsipras travels to North Macedonia


# Greece is likely to miss growth targets in 2019 due to weakening resolve commitment and international uncertainty, the Bank of Greece has warned. Governor Yannis Stournaras sounded the election-year warning at a presentation of the bank’s annual report. The economy, it said, is expected to grow by 1.9 percent this year _ below the respective EU Commission and Greek budget forecasts of 2.2 and 2.5 percent. “Increased uncertainty about the continuation of reforms coupled with credit constraints are weighing on investment,” Stournaras said. He stressed that additional effort was needed to reduce the stock of non-performing loans _ beyond the ambitious targets set out over the next three years. “NPL reduction needs to be further accelerated,” the governor said. Greece’s four leading banks, he said, had lowered the total volume of soured loans to 45.4 percent of the total by the end of last year.

# Economic sentiment in Greece has remained unchanged in March from the previous month, with expectations remaining mixed across different sectors. The survey issued monthly by Greece’s Foundation for Economic and Industrial Research, IOBE, recorded the index at 101.3 in March, unchanged from February but up from 99.6 in January. Worsening expectations in retail and industry were offset by gains in construction and services. Consumer confidence also improved _ showing an upward trend that the think tank said was consistent with past election years. In its March report, IOBE warned that reform delays in Greece carried an increasing risk. “The country is far from investment grade and smooth financing, and there is a delay in post-programme implementation of the monitoring agreement,” the report said. “But data from the European and broader economic environment are showing signs of deterioration.”

# On a landmark visit, Prime Minister Alexis Tsipras travels to North Macedonia today, joined by 10 members of his Cabinet and dozens of business executives and with plans to sign a long list of friendship agreements aimed at normalising relations after nearly three decades of frosty relations. Those include a military cooperation to help the former Yugoslav Republic with preparations to become the next member of NATO. Tsipras will be joined by North Macedonian Prime Minister Zoran Zaev, who successfully led the effort to rename his country earlier this year and end the damaging standoff with Athens. In an interview with North Macedonia’s MIA news agency, Tsipras said friendship between the two neighbors was a key step in building stability in the Balkans.



On our Radar: U.S. halts fighter shipments to Turkey, closer military cooperation with Greece expected
The United States has halted preparations for an F-35 fighter jet programme with Turkey, in a move expected to galvanize efforts to further cooperation with Greece. U.S. authorities said delivery of parts for the F-35 programme had been suspended in response to Turkey’s plans to buy the Russian S-400 surface-to-air missile system. Greece is already planning to allow expanded U.S. base usage, following the use of Larissa air base in central Greece for U.S. Air Force MQ-9 Reaper attack and surveillance drones. Last December, the U.S. held its annual ‘Jackal Stone’ anti-terrorism military exercises on the island of Crete.