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Quarterly Report for the Greek Economy
4 - 2015
January 21st, 2016
This presentation is supported bySponsor of the issue
A milder than anticipated recession in 2015
• A relatively significant dynamic from 2014, that
gradually paid off
• Positive effect from certain reforms taken in the last 3
years• Led to a slight reduction in the unemployment rate
• Dynamic of exported goods
• Boosts from increase in tourism, reduction in
energy costs and beneficial exchange rates
• Capital controls were anticipated due to a prolonged
period of uncertainty • Consumption levels were kept at relatively high level, due to
preventative deposit withdrawals by households and firms, as well as from a delayed collection of certain taxes
A milder than anticipated recession in 2015
Negative developments during the previous year
Extreme uncertainty as concerns the continuation of funding and the outlook of the economy
• Recession deepens
• Destabilisation of the banking system
Capital controls had a significantly negative impact on the economy as a whole
• Controls will continue into the current year
• A lifting of the controls is only achievable through a thorough transition oft the Greek economy to a new phase of balance and reliability
Combination of effects on the economy in 2016
•A pivotal point is how fast will the evaluation be resolved
• Pressures on the disposable income of households (increases in tax levels and insurance contributions; depletion of withdrawn savings) – limitations on consumption possibilities
• A positive impact from energy costs, a relative increase dynamic in tourism
• Productive forces target out of Greece - increase in exported goods
• Increased variability on a European and International level
Combination of effects on the economy in 2016
• Investment continues to be a weak link
• Uncertainty with regard to the medium-term course of the
economy remains steady
• Banks are unable to contribute with significant funding
• The economy is still being overseen without a reliable exit
plan for the markets
If we do not experience any positive or
negative shocks, the economy will again
be in a recession in 2016
A strategic orientation of fiscal policy is imperative
Current pressing issues:
• Growth through attracting foreign investment
• A decisive increase in funding to producers of exported goods
• Easing of limitations which keep the economy excessively
regulated
Any alternative solutions which promise prosperity and an exit from crisis through short-term, tactical moves, without a decisive transformation, were proven in practice to be inexistent
A strategic orientation of economic policy is imperative
An exit from the crisis will be possible when it will become clear which should be the characteristics of the economy in a decade from now and when the relevant developmental plan will have widespread and stable political and social support.
The lack of a plan discourages medium-term and long-term investment.
Current decisions are heavily dependent on expectations about the future steady state. Economic policy should focus primarily on aligning and reinforcing expectations towards a specific growth path, as well as avoid managing individual issues in a way that generates confusion as regards the ultimate target.
Individual components of economic policy
• Social Security: A greater dependency between pensions and all contributions, so as not to burden future generations
• Taxation: Smart use of e-payment systems, a widening of the tax base, stability, transparency, simplicity
• Human capital, Education
• Institutions
• Public Debt: emphasis on low debt service cost, over a longer period of time
• Valuation of assets: increase from a potential
improvement of expectations
Prospects
•Whether the economy will remain in a prolonged period of stagnation, being at the same time vulnerable to external disruptions and threats, or take a growth path, critically depends on the reliability of economic policy and the decisiveness of the growth turn.
•Choices concerning individual economic policy areas should not deviate from or doubt the central policy target.
Quarterly Report Overview
Global Economy
• Forecasts for global growth of 3.0% and global trade increase of 3.3% in 2015.
• Initial predictions for an acceleration of global growth in 2016 to 3.6% are unlikely to come true
• Dangers: A rapid deterioration of the Chinese economy, deepening of recession in Brazil and Russia
• Stock markets turmoil
• Falling prices of oil and other raw materials (metals etc.) are negatively impacting the economies of producer countries
• Economic sentiment and expectations indicators: Significant deterioration in key economic zones internationally, with the most intense fall recorded in Asia
• Eurozone: +1.9 (2015), + 2% (2016)
Return to recession in 3Q/2015 (after 6 quarters of growth)
Drop in GDP (July – September 2015): -1.1% against +0.7% in 1Q/2015 and
Stagnation in the first 3 quarters of 2015 (+0.1%) instead of an increase of
0.6% in the corresponding period of 2014
Recession was caused by:
• Abrupt decline in investment (-27.0%, from the first half of 2015: -3.4%)
o Despite the highly uncertain political situation of the first 6 months, firms did not reduce fixed capital formation
o Reduction in fixed capital investments by €991 million in 3Q and simultaneously a large reduction in stocks (- €562 million)
• Extensive reduction of exports (-12.5%, from +2.3% in the first half of 2015:)
o Exclusively from a decline in exports of services (-25.0%), due to international transfers – other services
− Small increase in exported products (+0.7%), from higher exports of non-petroleum products
Return to recession…
Containment of recession by:
• A continued increase in domestic consumer spending
o Small increase in household consumption (+0.3% from +1.3% in the first half of 2015) and consumption of the public sector (+0.4% from -0.6% in the first half of 2015)
− Households were in part prepared for capital controls (withdrawal of deposits)
− Rehiring – discontinuation of public sector reforms led to an intensification in government expenditure
• Sheer reduction of imported goods (-20.0% against +2.7% in first half of 2015)
− An evidently stronger impact of capital controls on imports
o Decrease of external sector debt by 37.3% (national accounts approach) in the first 9 months of 2015 (1.4% of GDP)
Implementation of 2015 State Budget
• State Budget primary outcome: Surplus of €2.27 bn., against
a target of €3.26 bn. (in the 2016 budget)
• SB total balance: deficit of €3.53 bn., as opposed to aim of
€2.57 bn.
• SB revenue shortfall of €1.67 bn. against the relevant target in
the 2016 Budget.
− Uncollected revenues of €3.59 bn., from ANFA's & SMP's, which
were first included in the target in 2016 State Draft Budget
• Higher reduction of expenditure, by €713 mil.
− On the other hand, Government’s arrears were widened by €1.97
bn.
State Draft Budget 2016
• Only mild improvement in fiscal outcomes is required:
o Reduction of State Budget deficit by €1.31 bn. against
provisional results for 2015
o Increase of primary surplus by €1.43 bn. against last year’s
realisation
− Carry-over effect of previous July-August measures brings
enhanced revenues in 2016
− Reduced expenditure due to much lower debt amortisation (€13.1
bn. against €32.8 bn. in the previous year)
Medium-term developments– 4Q/2015
• New fiscal measures – discounting the negative consequences of other policies (social security, protection regime about borrowers, etc.) limited household consumption
Slight increase in private consumption in 2015 (0.4%), smaller than the year before last (0.7%).
• Increase of government expenditure from September, after regaining access to support programme funding, NSRF restart
Increase in public consumption between October-December, increase in 2015 (+0.5% against -2.4% in 2014)
Medium-term developments– 4Q/2015
• Pending social security reforms, liquidity squeeze, capital controls - bank recapitalisation
Postponement of investments -12.5% the previous year, against +9.8% in 2014
• Decline in exports, in 4Q due to a decrease in non-petroleum products - tourism revenue, as well as from negative base effect
First annual decline since 2009 (≈-5.0%)
• Slight slowdown in the decline of imports, from loosening of capital controls
decline ≈ -7.5%, equal to the increase of the year before last
Causes of a milder than expected recession in 2015
1)Increase in private consumption during the first half of 2015, due to a heightened
concern over the outcome of the prolonged negotiations with the lenders
2)Anticipation of restrictions in capital mobility, led to a withdrawal of deposits from a
large part of households and firms. This fact allowed for the slight increase in private
consumption to remain steady even after the introduction of capital controls.
3)No convulsive reactions after the imposition of controls, as the banking system and
a significant part of the private sector had been more or less prepared
4)Worse effect of capital controls on imports than on exports, improving the external
sector’s contribution to GDP
oThe tourism industry was untouched during this critical quarter
Considering the slight decline in GDP in 3Q/2015 due to the aforementioned
factors, the magnitude of 2015 recession is estimated at 0.5%
In addition, decline of the rate of unemployment…
A 1.5% decline in unemployment in 2015
•Continuation in 4Q/2015 of the reduction in unemployment from job creation in
the tourism industry, however milder than in the summer
•Part of the increase in employment in 3Q/2015 in the manufacturing and retail –
wholesale businesses, has been maintained in the next quarter
Unemployment rate at 25.0% in 2015, from 26.5% the previous year
De-escalation in deflation due to a VAT increase
•0.6% deflation in 4Q, against 1.7% in Jan.-Sept.
•A greater price increase in 4Q in food – non-alcoholic beverages, tobacco –
alcohol, as well as hotels – cafés – restaurants, whose prices were mostly
affected by the changes in VAT
• Restraint of further deceleration from a new reduction in the international
petroleum price
Marginal increase in industrial product during the 11 months of 2015
Sources: ELSTAT, Eurostat
January - November 2015: +0.1% against -1.9% in the corresponding period of 2014
Industrial Production Index
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
Q1
20
05
Q2
20
05
Q3
20
05
Q4
20
05
Q1
20
06
Q2
20
06
Q3
20
06
Q4
20
06
Q1
20
07
Q2
20
07
Q3
20
07
Q4
20
07
Q1
20
08
Q2
20
08
Q3
20
08
Q4
20
08
Q1
20
09
Q2
20
09
Q3
20
09
Q4
20
09
Q1
20
10
Q2
20
10
Q3
20
10
Q4
20
10
Q1
20
11
Q2
20
11
Q3
20
11
Q4
20
11
Q1
20
12
Q2
20
12
Q3
20
12
Q4
20
12
Q1
20
13
Q2
20
13
Q3
20
13
Q4
20
13
Q1
20
14
Q2
20
14
Q3
20
14
Q4
20
14
Q1
20
15
Q2
20
15
Q3
20
15
Oct.
'1
5
No
v.
'15
Eurozone-18 Greece
Decline in retail trade in the first 10 months of 2015
Volume Index in Retail Trade (2010=100) and Business Climate Index in Retail Trade (1996-2006=100)
Volume Index: -30% against reference year (2010)
Jan. – Oct. 2015: -1.4% against Jan. – Oct. 2014: -0.3%
Sources: IOBE, ΕLSTΑΤ
40
50
60
70
80
90
100
110
120
130
40
50
60
70
80
90
100
110
120
130
Volume Index in Retail Trade(left scale) Business Expectation Index (right scale)
Contraction in many services branches in 2015 with the exception of tourism (+10%)
Sources: IOBE, ΕLSΤΑΤ
IT services: +9% against -5.4%
Turnover Index in Tourism (Accommodation and Food Service Industry)
Α Β C D Α Β C D Α Β C D Α Β C D Α Β C D Α Β C D Α Β C
2009 2010 2011 2012 2013 2014 2015
Indicator 59 109 171 75 61 98 158 63 48 96 157 51 39 80 146 42 32 84 148 58 47 90 159 70 49 102 175
0
20
40
60
80
100
120
140
160
180
200
Deceleration of recovery in the first 9 months of 2015
Production Index in Construction and Building Activity Indicator (quarterly y-o-y changes)
Sources: ELSTAT- Eurostat
Jan. – Sept. 2015: +0.3%
Jan. – Sept. 2014: +14.5%
-80%
-60%
-40%
-20%
0%
20%
40%
60%
80%
-80
-60
-40
-20
0
20
40
60
80
Q1 2
006
Q2 2
006
Q3 2
006
Q4 2
006
Q1 2
007
Q2 2
007
Q3 2
007
Q4 2
007
Q1 2
008
Q2 2
008
Q3 2
008
Q4 2
008
Q1 2
009
Q2 2
009
Q3 2
009
Q4 2
009
Q1 2
010
Q2 2
010
Q3 2
010
Q4 2
010
Q1 2
011
Q2 2
011
Q3 2
011
Q4 2
011
Q1 2
012
Q2 2
012
Q3 2
012
Q4 2
012
Q1 2
013
Q2 2
013
Q3 2
013
Q4 2
013
Q1 2
014
Q2 2
014
Q3 2
014
Q4 2
014
Q1 2
015
Q2 2
015
Q3 2
015
Q4 2
015
Building Activity Indicator (Greece) Production Index (Greece) Production Index (Eurozone)
Improvement of economic sentiment in 4Q/2015 – Still, at a significantly lower level than that of the corresponding period of 2014
Sources: ΙΟΒΕ, European Commission
Economic Sentiment Indicator
Overall, the economic sentiment in Greece in 2015 has
deteriorated in comparison to 2014
50
60
70
80
90
100
110
120
De
c-0
4
Jun
-05
De
c-0
5
Jun
-06
De
c-0
6
Jun
-07
De
c-0
7
Jun
-08
De
c-0
8
Jun
-09
De
c-0
9
Jun
-10
De
c-1
0
Jun
-11
De
c-1
1
Jun
-12
De
c-1
2
Jun
-13
De
c-1
3
Jun
-14
De
c-1
4
Jun
-15
De
c-1
5
European Union Eurozone Greece Average, Greece (2001-2014)
Gradual correction of expectations after the summer shock, in all sectors. However, in relation to 2014, firms’ expectations have deteriorated noticeably in all sectors overall in 2015.
Source: ΙΟΒΕ
ConstructionIndustry
Retail Trade Services
-50-40-30-20-1001020
50
70
90
110
130
De
c-0
4Ju
n-0
5D
ec-
05
Jun
-06
De
c-0
6Ju
n-0
7D
ec-
07
Jun
-08
De
c-0
8Ju
n-0
9D
ec-
09
Jun
-10
De
c-1
0Ju
n-1
1D
ec-
11
Jun
-12
De
c-1
2Ju
n-1
3D
ec-
13
Jun
-14
De
c-1
4Ju
n-1
5D
ec-
15
Industry Overall
Average (2001-2014)
Industry - Eurozone
-40
-30
-20
-10
0
10
020406080
100120
No
v-0
4M
ay-0
5N
ov-
05
May
-06
No
v-0
6M
ay-0
7N
ov-
07
May
-08
No
v-0
8M
ay-0
9N
ov-
09
May
-10
No
v-1
0M
ay-1
1N
ov-
11
May
-12
No
v-1
2M
ay-1
3N
ov-
13
May
-14
No
v-1
4M
ay-1
5N
ov-
15
Constructions Overall
Average (2001-2014)
Construction - Eurozone
-30-25-20-15-10-50510
0
20
40
60
80
100
120
140
De
c-0
4Ju
n-0
5D
ec-
05
Jun
-06
De
c-0
6Ju
n-0
7D
ec-
07
Jun
-08
De
c-0
8Ju
n-0
9D
ec-
09
Jun
-10
De
c-1
0Ju
n-1
1D
ec-
11
Jun
-12
De
c-1
2Ju
n-1
3D
ec-
13
Jun
-14
De
c-1
4Ju
n-1
5D
ec-
15
Retail Trade Overall
Average (2001-2014)
Retail Trade - Eurozone
-30
-20
-10
0
10
20
30
40
60
80
100
120
De
c-0
4Ju
n-0
5D
ec-
05
Jun
-06
De
c-0
6Ju
n-0
7D
ec-
07
Jun
-08
De
c-0
8Ju
n-0
9D
ec-
09
Jun
-10
De
c-1
0Ju
n-1
1D
ec-
11
Jun
-12
De
c-1
2Ju
n-1
3D
ec-
13
Jun
-14
De
c-1
4Ju
n-1
5D
ec-
15
Sevices Overall
Average (2002-2014)
Services - Eurozone
Marginal deterioration of consumer confidence in 4Q/2015 -At a worse level than the previous year
Sources: ΙΟΒΕ, European Commission
Consumer Confidence
However, overall, the indicator was higher in 2015 than in 2014
-90
-80
-70
-60
-50
-40
-30
-20
-10
0
De
c-0
4
Jun
-05
De
c-0
5
Jun
-06
De
c-0
6
Jun
-07
De
c-0
7
Jun
-08
De
c-0
8
Jun
-09
De
c-0
9
Jun
-10
De
c-1
0
Jun
-11
De
c-1
1
Jun
-12
De
c-1
2
Jun
-13
De
c-1
3
Jun
-14
De
c-1
4
Jun
-15
De
c-1
5
European Union Eurozone Greece Average, Greece (2001-2014)
Unemployment at a three-year low
Number of unemployed in Greece, 1Q/2008-3Q/21015
Unemployment reached 24.6% in 3Q/2015 against 25.5% in 3Q/2014
Employment increased in 10 sectors: Indicatively: Tourism (+8.4%), Retail and Wholesale Trade (+7.4%), Manufacturing
(+9.9%), Real Estate Activity (+17%)
By contrast, unemployment decreased in 11 sectors: Indicatively: Mines and quarries (-14.9%), Construction (-7%),
Power Supply (-5.5%), Agriculture, Forestry and Fishing (-4.6%).
418,60366,70364,0
402,20
476,70455,60477,90
528,60
600,20604,60631,90
720,80
799,60815,60
883,50
1028,60
1119,101163,0
1218,40
1279,90
1336,01327,901320,301337,201342,30
1280,101229,401245,90
1272,50
1180,101160,50
0
200
400
600
800
1.000
1.200
1.400
1.600
Decline in the deficit in the trade account in 2015 (Jan. –Oct.) by 16.4%
January – October 2015:
Exports : -5.5% (€21.2 bn., incl. fuels)
• +9.2% (€14.8 bn., excl. fuels)
Imports: -10.1% (€35.4 bn.)
Trade deficit: -16.4%
Intense decline: Fuels (-27.8%)
Increase: Agricultural Goods (14.8%), Industrial Goods (7.9%) and Raw Materials (0.8%)
Markets:
Losses: Turkey (46.8%), Estonia (11.6%), Ukraine(24.1%), Bulgaria (5.1%), Russia (42.7%), Tunisia(4.,6%), U.A.E. (28.1%), Libya (20.9%), China (18.5)
Increases: Ε.Ζ.(15.2%), EU-28 (12.4%), N. America(49.8%), Cyprus (12.3%), Italy (23.1%), UnitedKingdom (13.7%), Denmark (27%) Egypt (24.9%),Lebanon (37.4%), S. Korea (37.7%), Germany(4.1%), Belgium (12%)
Jan. – Oct. 2015 (ELSTAT estimations)
Exports: -5.1% (€21.5 bn.)
Imports: -9.7% (€36.2 bn.)
Trade deficit: -15.7%
€,0
€10000,0
€20000,0
€30000,0
€40000,0
€50000,0
€60000,0
2008 2009 2010 2011 2012 2013 2014 2015
Mil.
€
DEFICIT IMPORTS EXPORTS
Current account surplus of €2.3 bn. in the 10-month period of 2015, mainly due to the dip in imports
Current Account Balance, January-October 2009-2015
Source: Bank of Greece
Decrease in imported goods and services between Jan. – Oct.
by 14.2% (-€7.3 bn.)
Decrease in exported goods and services by 7.6% (- €3.8 bn.)
-22.496,0-20.993,0
-16.346,0
-5.230,0
-1.916,0-403,0
2.271,0
-25.000
-20.000
-15.000
-10.000
-5.000
0
5.000
2009 2010 2011 2012 2013 2014 2015
mil.
€
Current Account Balance
The food industry/sector had an import share loss in the July – November period, whereas the export share Agriculture was the one that mostly declined
Sources: Eurostat, data processing by ΙΟΒΕ
Changes by industry/sector (imports-exports) period 2014-2015
(July - November)
There was a simultaneous increase in the corresponding share of
exports In the food industry for the same period in 2015
-1,1
-1,0
-0,7 -0,7
-0,5
-1,2
-1,0
-0,8
-0,6
-0,4
-0,2
0,0
10
-Fo
od
24
- M
etal
s
29
- V
eh
icle
s
20
- C
he
mic
als
27
- El
ectr
ical
Ge
ar
Imports
-1,6
-1,2
-0,5 -0,5 -0,4
-1,8
-1,6
-1,4
-1,2
-1,0
-0,8
-0,6
-0,4
-0,2
0,0
01
- A
gric
ult
ure
14
- C
loth
ing
Item
s
20
- C
he
mic
als
21
- P
har
mac
euti
cals
38
- P
roce
ssin
g
Exports
Deceleration of deflation
• The price drop of 2015 wasthe largest of at least thelast 55 years.
• Price decreases in housing(-6.5%) and transport (-4.4%) were the largestamongst the variouscategories of goods andservices included in H.I.C.P.
However, in past December, the Harmonised Index of Consumer Prices
increased, for the first time in 2015
-3
-2
-1
0
1
2
3
4
5
6
No
v-1
0
Ja
n-1
1
Ma
r-1
1
Ma
y-1
1
Ju
l-1
1
Sep
-11
No
v-1
1
Ja
n-1
2
Ma
r-1
2
Ma
y-1
2
Ju
l-1
2
Sep
-12
No
v-1
2
Ja
n-1
3
Ma
r-1
3
Ma
y-1
3
Ju
l-1
3
Sep
-13
No
v-1
3
Ja
n-1
4
Ma
r-1
4
Ma
y-1
4
Ju
l-1
4
Sep
-14
No
v-1
4
Ja
n-1
5
Ma
r-1
5
Ma
y-1
5
Ju
l-1
5
Sep
-15
No
v-1
5
%
Eurozone Greece
HICP trend
Medium-term developments
• Challenges from the new Programme implementation
o Implementation of reforms on Social Security System and Taxation
o Negotiation for the debt
o Structural changes to sectors (OECD as well as restructuring of loans)
o Privatisations – Transition to new fund
Necessary intergovernmental cooperation – fast coordination for the application of reforms without a prolonged adaptation period
A completion of the current evaluation & conversation about debt will curb uncertainty decidedly; primarily, they will provide access to the ECB’s main liquidity mechanism
• Consequences of fiscal consolidation - reforms
o Reduction of households’ disposable income due to social security reforms
o Higher direct taxes – insurance contributions of firms
o Containment of construction activity, in view of changes in property taxes
Medium-term developments
Banking system in a transitionary phase
• Successful recapitalisation – capital needs are significantly lower than estimated by the
July 12th agreement
• Pending the implementation of new framework for the protection of (loan) borrowers
• Deposits at a low level reliability has not recovered
• For a return of deposits and in order to regain access to the ECB’s main mechanism,
there needs to be progress in Programme implementation Facilitation of credit supply,
acceleration of loosening and lifting (in the medium-term) of capital controls
Increase in available funds – boost to liquidity outside the banking system from:
• Public Investments Programme payments at €4.2 bn in 4Q/2015
• Increase in the PIP for 2016 (+ €350 mil.) - frontloaded implementation
• Νο broadening of the government’s arrears – acceleration of their repayment
Medium-term developments
Additional factors that will influence investments
o Low energy costs
o Geopolitical developments in the wider region
External sector
Exports
o Curbing of exports excl. ships – petroleum products by the end of 2015
o Further significant increase in tourism revenues is not most possible
o Weakening of the negative impact of petroleum products
o Acceleration of growth in major markets (e.g. Eurozone – USA)
Imports
o Mild weakening of capital controls’ impact during the current year
o High import level in the first half of 2015 (as a basis for comparison for 2016)
2016 Forecasts
• Decrease of private consumption as a result of measures
– uncertainty with regard to social security changes–
income tax – protection of borrowers (≈ -2.0%)
• Reduction in government expenditure as a result of the
restart of fiscal adjustment (≈ -3.0%)
• Postponement in investments (≈ -4.0%) due to :
o Prolonged negotiations
o Relatively limited investment sources (excl. PIP)
o Pending reforms in social security system - taxation
o Changes in real estate property taxation
2016 Forecasts
•Increase of exports due to demand from developed economies (Eurozone - USA), decline in downward effects of oil products (≈ +2.0%)
• New decrease of imports, due to fall in consumption demand – investment, as well as from conjectural spending in the first half of 2015 (≈ -3.5%)
2016: Slight deepening of recession, to ca.1.5%
2016 Forecasts
Slight increase in unemployment
Impact of the reduction in private consumption on employment in sectors producing goods – services for final consumers (Retail Trade and Food Service Activities)
Slight or no further increase in Tourism
Construction: Increase in Public Works – decrease in building
Increase in unemployment by 0.5% in 2016 (25.5%)
Mild inflation, after three years of price drops Due to increase in VAT
Containment of inflationary pressures due to new decline in the price of petroleum
0.5-1% increase in the Consumer Price Index
ELECTRONIC MEANS OF PAYMENT AND BOOSTING OF TAX REVENUE ΙΝ GREECE
IOBE Study Presentation:
Study scope
To investigate the role of the electronic means of payment in reducing shadow economy and boosting tax revenue
To quantify the impact on tax revenue from incentivising the use of electronic means of payment in retail transactions
Electronic
Means of
Payment (EMP)
Payment Cards
Electronic Money
Credit Transfers
Direct Payment Commands
Greece ranks in one of the last positions in the EU-28 in terms of EMP usage
0
50
100
150
200
250
300
350
400
450
500
Gre
ece
Ro
man
ia
Bu
lgar
ia
Mal
ta
Ital
y
Po
lan
d
Cyp
rus
Hu
nga
ry
Cze
ch R
epu
lic
Slo
vaki
a
Lith
uan
ia
Cro
atia
Spai
n
Latv
ia
Irel
and
Slo
ven
ia
Po
rtu
gal
EU-2
8
Fran
ce
Ger
man
y
Bel
giu
m
Esto
nia
Au
stri
a
Un
ite
d K
ingd
om
Den
mar
k
Net
her
lan
ds
Swed
en
Fin
lan
d
Luxe
mb
ou
rg
Source: Member banks of the Hellenic Bank Association, Data Processing: ΙΟΒΕSource: ECB
The Bank holiday gave a strong push to e-payment methods, however
there is still much room for an increase in their use
99 10091
203
177 176
100
205
178
194
0
50
100
150
200
250
June/15 July/15 August/15 September/15In
dex
(10
0=J
un
e 2
01
5)
Value per transaction Total value
Number of transactions
Domestic sale transactions with payment cardsNumber of digital payments per inhabitant (2013)
Consumer distrust and fragmented entrepreneurship restrict domestic use of EMP
• Lack of trust by consumers
• Fragmented entrepreneurship
• Other factors (economic crisis, benefits from tax evasion)
Measurable factors
• The value of EMP use for consumers is low when their penetration among merchants is low and vice versa
Network effects • Paying is a daily
repetitive action, governed by habits
• EMP diffusion is stabilised at low levels
Habits
The effect of the measurable factors is reinforced by network effects and
the power of habit
EMP limit shadow economy and have an effect on GDP through catalytic effects
• The positive effect of EMP on tax revenues is proven through empirical analysis of data for the Greek economy.
• For each increase of payment cards use by one percentage unit, tax revenues are estimated to have increased by 0.24% for the period 2000 – 2013.
Boost GDP
Limit shadow economy
Limit transaction
costs
Stimulate the creation of
new servicesStrengthen
market competition
Increase consumption
Source: Zandi και Singh (2010, 2013), The Impact of Electronic
Payments on Economic Growth. Moody’s analytics.
The need to limit tax evasion has led to the adoption of measures to boost usage of EMP internationally
Use of e-transactions
Lotteries
Ban on use of cash
Income tax rebate
Fight against tax evasion
Discounts on transaction
value
Based on econometric analysis of
transaction data from a random and
anonymous sample of 40 thousand people,
it emerges that the motives offered by
domestic banking institutions are positively
associated both with the frequency of card
use, as well as with value per transaction.
The implementation of appropriate measures could lead to a significant boost in tax revenues
Policy instrument Conservative Main Optimistic
1% refund 47 248 610
5% refund -1 79 182
10% refund -10 90 183
EMP lottery in high-risk
sectors 6 72 153
POS in utilities 0 2 5
POS in small shops -14 124 297
Ban on cash in high-risk
sectors16 82 163
Total 46 696 1594
Net fiscal impact per scenario and policy instrument (€ mil.)
Source: ΙΟΒΕ
Thank you!
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