Swiss-based multi-national investment bank UBS continues to hold a “bullish” stance on the Greek economy and the country’s banking sector for the remainder of 2024, justifying its outlook with four main reasons.
In its report, UBS posits that Greece is on course to achieve a 2.5% GDP forecast in 2024, notwithstanding weak Eurozone indicators such as the purchasing managers index (PMI), and Income from operations (IFO).
More consistent tax collection by the Greek state is expected to lead to a fiscal overperformance for 2024, a fact mirroring the recent revision of Greece’s primary budget surplus targets for 2024 and 2025, as opposed to the 2.1% set in the Stability Program.
UBS projects a further downtick in state government bond yields, while the Swiss firm also maintains it positive outlook on the Greek banks, citing strong second-quarter results.
While the report continues to hold a constructive position on the country’s macroeconomic outlook and the prospect of the Greek markets, it highlights key risks that might shift this outlook on the Greek economy, including weak Eurozone performance, natural disasters, and potential delays and distribution of EU Recovery and Resilience Facility Funds (RRF).
As UBS underlines, Greece’s economic growth failed to live up to expectations last year mainly due to:
a) delays in the absorption of EU funds, and
b) the impact of the flooding in the Thessaly region.
This year, however, UBS believes that the data remains consistent with its forecast of 2.5% GDP growth, which is 60 basis points above consensus and 30 basis points higher than the latest (and downwardly revised) official government estimate of 2.2%.
