Greece lags greatly in productive investments

The gap in productive investments in Greece remains large, as they represent approximately 12% of the country’s gross domestic prouct, compared to approximately 16% of GDP in the European Union, according to the annual investment survey of the European Investment Bank for 2023, presented on Thursday in Athens by its chief economist, Deborah Revoltella.

She spoke of a positive balance in the overall investment image of Greece, as in recent years the increase in investment has been significant and certainly higher than that of the EU, while businesses are optimistic about the future.

However, the research data also contain some warnings:

• About 60% of businesses, compared to 70% in the EU, have invested in digitization, and only 30%, compared to 50% in the EU, have invested in the energy transition.

• About 3 out of 10 Greek companies (28%) developed or introduced new products or services as part of their investment activities in 2022, against a 39% EU average.

• Only 70%, compared to around 90% in the EU, have taken measures to reduce carbon dioxide emissions. In contrast, around 50%, compared to 35% in the EU, have taken measures for resilience against natural disasters.

• The participation of women in the labor market is barely 60%, compared to over 70% in the EU, and the percentage is about the same for women with or without children.

The main obstacles faced by Greek businesses are uncertainty about the future, administrative obstacles, the availability of specialized personnel and the cost of financing. The problems of European companies are similar, but the degree of difficulty differs. For example, one in four businesses in Greece (26%) are dissatisfied with the cost of financing, compared to just 14% in the EU.

Revoltela emphasized the need to continue the investment momentum to cover the gap that will be created after 2026, when the resources of the Recovery Fund will be exhausted.

Stournaras warning

Speaking at the event, where the EIB study was presented, the governor of the Bank of Greece, Yannis Stournaras, voiced his own warning.

The timely absorption and disbursement of EU funds. to the private sector is crucial, he said, noting that while the absorption rate is satisfactory, reaching 41%, which ranks Greece in fourth place, disbursements to businesses are progressing at a slower pace – 14% of the total – a fact which delays the realization of investment costs.

“Given the problem- associated with population aging, low birth rates and low participation in the labor force, the role of investments in material and human capital becomes decisive for the future course of the economy,” he stressed.

The central banker also referred to the investment gap, citing a recent study by the IMF, according to which it reached up to 8% of GDP in 2019. According to EU data, moreover, investments in Greece were in 2023 14.3% of GDP, compared to 22% in the EU.

In order for the investment gap to be filled, Stournaras emphasized that a wide range of ambitious reforms must be implemented, such as in justice and against bureaucracy, but also to remove obstacles to competition in the markets of goods and services. He also spoke about the need to strengthen competition in the banking system.