GREECE Macro Flash. Government Budget Combining policy credibility with a mild fiscal expansion in 2019

Transcription

1 6 7 8e 9f GREECE Macro Flash N A T I O N A L B A N K O F G R E E C E Government Budget 9 December 8 Combining policy credibility with a mild fiscal expansion in 9 Macro Indicators in pages 6-7 Nikos S. Magginas PhD Head of Greece Macro Analysis (+) 6 nimagi@nbg.gr Effrosyni Alevizopoulou PhD (+) 6 alevizopoulou.e@nbg.gr Aikaterini Gouveli MSc (+) 9 gouveli.aikaterini@nbg.gr Eleni Balikou MSc (+) 98 balikou.eleni@nbg.gr NBG Economic Analysis Department Greece Macro Analysis Team 86 Eolou Str., 9 Athens, Greece Greece s commitment to fiscal soundness has been re-affirmed in 8, with the primary surplus in General Government in FY:8 estimated at.98% of GDP, exceeding the Enhanced Surveillance Framework s maximum target for a surplus of.% of GDP, for a third consecutive year. A notable improvement in the State budget primary balance of.8 pps is the key determinant of the fiscal outcome in 8. About two-thirds of the increase in the State budget primary surplus reflects a reduction in primary spending (-.% or -.% of GDP). This improvement reflects lower transfers from the Greek State: i) to the social security system (.7% of GDP lower than in 7); ii) to other central and general government entities (.% of GDP lower than in 7); and iii) to hospitals (.% of GDP lower than in 7). The primary surplus is expected to increase further to.% of GDP in 9. Primary expenditure is projected to decline by another.6% of GDP in 9 The deficit in the public investment budget (PIB) was significantly lowerthan-initially budgeted and.% of GDP lower than in 7, due to the increase in EU funding (8.% in FY:8 or.8% of GDP) Net revenue of the State budget remains constant as a per cent of GDP in 8, as lower tax refunds by.% of GDP offset the small decline in tax revenue, mainly due to the stagnant proceeds from personal income tax (.% and -.% of GDP on an annual basis). For 9, the projection of a pp decline in tax revenue as a per cent of GDP is very conservative and provides room for an overperformance against the respective revenue targets The surplus in the social security system remains significant at.% of GDP in 8 from.6% in 7, with the decline on an annual basis broadly corresponding to the reduction in the transfers from the State budget to the social security funds of.% of GDP during this period A set of expansionary measures amounting to.% of GDP will take effect in 9, corresponding to the recurring part of the fiscal overperformance in previous years. This expansion, in conjunction with a positive carry of.% from GDP growth trend in 8, sets the stage for an acceleration in GDP growth close to the Budget target of.% in FY: Net improvement in General Government primary balance & GDP growth % GDP, inverted axis - - Annual change in Gen. Gov. primary balance (%GDP, inverted axis, right axis) Real GDP growth (, left axis)

2 e 9f FR ES LV FI EE SK EU EA AT BE IE LT LU IT NL SI DE PT MT GR CY Budget 9: Combining policy credibility with a mild fiscal expansion in the post-programme era Greece s commitment to fiscal soundness has been re-affirmed in General Government primary balance as % of GDP - 8 % GDP Gen. Gov. Primary balance as % of GDP Greece s commitment to fiscal soundness has been re-affirmed in 8. According to the Government Budget for 9, the primary surplus in General Government in FY:8 is estimated at.98% of GDP, exceeding, for a third consecutive year, the rd Programme s and the Enhanced Surveillance Framework s maximum target for a surplus of.% of GDP. The Budget includes a modest set of expansionary measures for 9, amounting to.% of GDP, which will be financed by the recurring part of the fiscal overperformance in the period 6-8, without the implementation of pension cuts that were initially planned to be implemented in 9. The Budget received a positive assessment from the European Commission as regards its compliance with Greece s fiscal targets under the coordinated Enhanced Surveillance Framework of the European Semester. The primary surplus in General Government in FY:8 is estimated at.98% of GDP, exceeding, for a third consecutive year, the maximum target for a surplus of.% of GDP - Greece: Primary and total General Goverment balance % GDP surplus - A notable improvement in the State budget primary balance of.8 pps to a surplus of.% of GDP in 8 from a deficit of.% of GDP in 7 is the key determinant of the fiscal outcome in 8. The primary surplus, at a state level, is expected to increase further to.% of GDP in 9. The State budget surplus is combined with the surpluses of other non-state entities and of the social security system, to bring the estimated primary surplus in General Government to.98% of GDP in 8 and to.6% in 9 (ESA data, including adjustments according to the definition of Enhanced Surveillance framework) decifit Primary balance (% GDP) General Government balance (% GDP) Lower primary expenditure and higher inflows of EU funding boosted State budget outcomes About two-thirds of the increase in the State budget primary surplus reflects a significant reduction in primary spending from.% of GDP in 7 to.% of GDP in 8 (-.% or -.% of GDP). This decline mainly reflects lower transfers from the Greek State: i) to the social security system (.7% of GDP lower than in 7); ii) to other central and general government entities (.% of GDP lower than in 7); and iii) to hospitals (.% of GDP lower than in 7). Sources: EL.STAT., Ministry of Finance, AMECO, NBG estimates GREECE NBG Macro Flash December 8 p.

3 A solid increase in the State budget, combined with the sustainable surpluses of other non-state entities and of the social security system, are the key determinants of the fiscal outcome in 8 General Government - primary balance decomposition (ESA adjusted, as % of GDP) 7 8e 9f. Primary State balance (a-b+c) -,,, Ordinary Budget balance (a-b),,8, a. Net Revenue, State 6,8 6,8,8 Tax revenue 7,9 7,6 6,6 Personal income tax 6,,9,8 Corporate income tax,,, Property tax,7,6, VAT 9, 9, 8,9 Excise consumption taxes,9,9,8 Taxes on imports,,, Other production taxes,8,7, Other tax revenue,7,8,7 Non-tax revenue,,9,7 Tax refunds,,7, b. Primary spending, State,,, Compensation of employees 6,7 7, 6,7 Social benefits,,6, Transfers,9,,6 Purchases of goods & services,6,8,7 Subsidies,,, Other expenditure,,, Undistributed expenditure,,7, Real asset purchases,6,, c. Public Investment Budget net balance -, -, -,. Extrabudgetary funds balance,6,8,. Public Enterprises balance,,8,. Hospitals balance,,, A. Central Gov. Primary balance (+++),,, B. Social security & local Gov. Primary balance,,,6 Local government (including interest payments),,, Social security funds (including interest payments),6,,9 General Government primary balance (A+B),9,,9 Adjustments (Enhanced Surveillance Framework), -, -, Gen. Gov. Primary balance (Enhanced Surveillance Framework),,98,6 This development reflects credible restraint in government operational spending, which is accompanied by an improvement in the financial sustainability of the recipient entities (social security system, local governments, public enterprises), following several years of intensive restructuring and application of cost-saving measures. In 9, the State budget primary surplus is expected to increase further by.7 pps to.% of GDP. Once again, a decline in primary expenditure by.6% of GDP, due to lower transfers to local Governments (.% of GDP lower than in 8) and an additional shrinkage in other transfers to General Government entities (excluding the social security system), is projected to be the key driver of fiscal outcomes in the next year. The deficit in the public investment budget (PIB) was significantly lower-than-initially budgeted, due to the increase in EU funding. An estimated increase in EU financing of the PIB by 8.% in FY:8 (.8% of GDP) will be translated into a.-pp reduction in the PIB deficit to -.% of GDP in FY:8, assuming an annual increase in investment spending of.% of GDP in FY:8 (Budget 9 target). In 9, the PIB is not expected to play a significant role in the annual increase in the State budget primary surplus, since it will remain broadly constant as a per cent of GDP. On the revenue side, it is notable that the expected increase in tax revenue by.% in FY:8 will lag behind the increase in nominal GDP (+.% in FY:8), leading to an annual decline in the revenue share in GDP of. pps in FY:8. This development mainly reflects stagnant revenue from personal income tax (+.% and -.% of GDP on an annual basis). Moreover, VAT revenue and CIT revenue are expected to increase by.% and.%, respectively, in FY:8, with their sum remaining broadly flat as a per cent of GDP compared with 7. However, net revenue of the State budget will remain constant as a per cent of GDP, due to the decline in tax refunds by.% of GDP from the historically high level in 7. For 9, the Budget conservatively projects a -pp decline in tax revenue as a per cent of GDP, on an annual basis, with the level of tax revenue remaining broadly flat against an annual increase of.8% in nominal GDP. In fact, the average annual increase in tax revenue, excluding property taxes, is projected at.6% in Sources: EL.STAT., Ministry of Finance, NBG estimates GREECE NBG Macro Flash December 8 p.

4 e 9f * * * *6 7 8e 9f forecasts Budget assumptions for tax revenue growth in 9 are rather conservative,,,,,,,,, Tax revenue (excl. property tax revenue) & nominal GDP,,,,6 7 M:8 8e 9f Tax revenue (excl. property tax revenue, ) Nominal GDP growth () especially as regards indirect taxes Revenue from social security contributions show a high responsiveness to increasing economic activity VAT revenue & nominal domestic demand *years with increase in the effective VAT rate VAT revenue (incl. indirect tax arrears, ) Nominal domestic demand () Social security contributions & households' disposable income Social security contributions (left axis) Households' disposable income (right axis) , while revenue from property taxation is estimated to contract by 9.6% (.% of GDP), due to the planned reduction in the single property tax. Although a less-than-unitary elasticity of tax revenue to nominal GDP growth would be expected during the economic recovery, the Budget assumption for an effective elasticity of tax revenue of approximately. is rather conservative and provides room for an overperformance against the respective revenue targets for 9 (assuming a constant level of efficiency and compliance in tax collection). The rebalancing in the social security system is sustainable The surplus in the social security system remained significant, at.% of GDP in 8 from.6% in 7, with the decline on an annual basis broadly corresponding to the reduction in the transfers from the State budget to the social security funds of.% of GDP during this period. Most notably, the annual increase in revenue from social security contributions is expected to exceed.% in FY:8, being higher than the estimated annual growth in private sector s disposable income and nominal GDP of.% and.%, respectively, and thus leading to a small increase in revenue from social security contributions in GDP of. pps. This development, aside from the supportive macroeconomic trends in 8, reflects a further increase in social security contribution rates for the self-employed with medium-to-high incomes, along with additional revenue from confiscations for contribution arrears and multiple installment arrears-clearance schemes remaining in effect during 8. Regarding social security spending, in 8, pension expenditure recorded a small reduction of approximately. pps of GDP (including the additional fiscal cost for the reversal of cuts to uniformed officials and some other categories of employees, following relevant decisions by the Council of State). This improvement reflects a slowing in net retirement flows, along with additional reductions in retirement benefits for new pensioners from the application of Law 67/6, as well as the complete phasing-in of other reforms legislated in previous years. Most of the above factors that supported the financial position of the social security system in the period 6-8 are estimated to support the system s medium-to-long term viability. Sources: EL.STAT., Ministry of Finance, Eurostat, AMECO, NBG estimates GREECE NBG Macro Flash December 8 p.

5 6 7 8e 9f The set of expansionary measures for 9 amounts to.% of GDP - negative sign = increase in spending or Value % GDP decrease in revenue ( mn ) A REVENUE -7 -,% % weighted average reduction in property tax (ENFIA) / reduction in social security contributions of the independent professionals, self-employed and farmers and implementation of the lowest entrylevel salary for supplementary pension contributions Reduction of the dividends tax rate from % to % (fiscal impact from onwards) Reduction by pp per annum of the corporate tax rate from 9% to % over the next four years (fiscal impact from onwards) -6 -,% -77 -,9%,%,% B EXPENDITURE -7 -,% Housing allowance - -,% 6 Fiscal expansion measures 9 (net basis) Subsidy of young employees' (aged under ) social security contributions - -,% 7 Education & Help at Home programs - -,% New fiscal interventions (A+B) -9 -,% The direct boost to activity in 9 from the fiscal expansion of.% of GDP is expected to contribute to an acceleration in GDP growth in FY: Net improvement in Gen. Gov. Primary balance (inverted) & GDP growth Real GDP growth (, left axis) % GDP, inverted axis Annual change in Gen. Gov. Primary balance (% GDP, inverted axis, right axis) - - Overall, the surplus of the social security system is expected to decline to.9% of GDP in 9 from.% in 8, due to the additional costs related to the implementation of the social relief measures taking effect in this year. The measures mainly comprise a reduction by one-third of the social security contributions of the independent professionals, self-employed and farmers (estimated fiscal cost of.% of GDP) and the introduction of a housing allowance for low-income households (estimated cost of.% of GDP). In this context, the annual increase in revenue from social security contributions in 9 is expected to slow to.6%, with some downside risks related to the improved attractiveness of lowered contributions for the self-employed, which could prompt a modest shift of employment from the wage earners category. The first year of fiscal expansion in a decade is in sight The modest set of expansionary measures, which will take effect in 9, corresponds to the first loosening in fiscal policy since the eruption of the economic crisis (an effective expansion of.% of GDP in has been offset by increasing uncertainty). This expansion will be financed by the recurring part of the fiscal overperformance in the period 6-8 (.% of GDP, on average) and is expected to mainly support domestic demand. In fact, this impetus of about.% of GDP in 9 follows an effective fiscal contraction of almost % of GDP between and 7, which is based on the implementation of an unprecedented set of austerity measures that exceeded % of average GDP in this period. This aggressive fiscal adjustment during the crisis led to an average fiscal drag of about.% of GDP per annum in the previous decade and could be considered as a major driver of the severe recession during this period. The direct boost to activity in 9 from the fiscal expansion of.% of GDP, in conjunction with an estimated positive carry of.% from the supportive GDP growth trend during the course of 8, set the stage for an acceleration in GDP growth close to the Budget target of.% in 9. Sources: EL.STAT., Ministry of Finance, IMF, NBG estimates GREECE NBG Macro Flash December 8 p.

6 Greece: Tracking the economy s cyclical position Dec- Jan-6 Feb-6 Mar-6 Apr-6 May-6 Jun-6 Jul-6 Aug-6 Sep-6 Oct-6 Nov-6 Dec-6 Jan-7 Feb-7 Mar-7 Apr-7 May-7 Jun-7 Jul-7 Aug-7 Sep-7 Oct-7 Nov-7 Dec-7 Jan-8 Feb-8 Mar-8 Apr-8 May-8 Jun-8 Jul-8 Aug-8 Sep-8 Oct-8 Nov-8 PMI (index level),, 8, 9, 9,7 8,, 8,7, 9, 8,6 8, 9, 6,6 7,7 6,7 8, 9,6,,,,8,,,, 6,,,9,,,,9,6,, Industrial confidence (index level) -,6 -, -, -7,8-7,8 -,6-9, -7, -, -6, -,7-7,8 -,7 -, -, -6,7 -,6 -, -7, -,7 -,7 -,7 -,7 -,9,,, -, -, -, -,6, 6,, -, -, Manufacturing production (),,, -,7 7, 7, 8,9,8,,9 7,, -,8,,7, -,9,9,,,8,,,7 7,9 6,9, -,6,6,,9,,7, -, Industrial production () 6,9, -,9 -,6,7, 8,,, -, 6,9,, 7,,,9, 6,8,,,,,6,, -, -,9,,,7,,,,8 -, Services confidence (index level) -6,6 -, -, -7, -, -, -7, -8, -, -6,9,, -, -,,9 6,6 8,9, 9, 7,,9,,,6, 8,9 8,9 7,7,6,,,9,9,,7, Consumer confidence (index level) Retail confidence (index level) -, -,,,,6,,7 8, 9,,,7,9 9,8,9,9,7,, -, -, -,6,,, -,,8,8,, 6,,6,9 9,7, 6,, Retail trade volume (), -,8-6,8 -, -, -6, -,6 9,7 -,,,,9 -, -, 9,9 -,,,,7,,8 -,9 -,9 -,,7, -,,,,,7,,6, Construction Permits () House prices (yoy, quarterly series) -, -, -, -, -, -, -, -,8 -,8 -,8 -, -, -, -,9 -,9 -,9 -, -, -, -,7 -,7 -,7 -, -, -,,,,,,,,,, Construction confidence (index level) Employment (),8,,,,,,,,,,, -,,,9,,,,,,,,8,7,8,7,7,7,7,,,, Interest rate on new private sector loans (CPI deflated),,7, 6, 6,,7,6 6,,9,7,,7,8,7,,7,,6,,7,9,7,,6,,,,8,,9,,9,7,7, Credit to private sector () -, -, -, -, -,9 -, -, -,6 -,7 -,6 -,6 -, -, -,6 -,6 -, -,9 -, -, -, -,9 -,8 -,9 -,9 -,8 -,8 -,9 -, -,9 -,9 -, -, -, -, -, Deposits of domestic private sector () -, -7, -, -, -9, -6,,,7,,6,,,,,9,,,,,,,6,6,8,7,9,6 6, 7, 7, 7, 7, 7, 7, 6, Interest rate on new time deposits (households, CPI deflated),,7,,,,7,6,9,8,8,,6,7 -, -,6 -, -, -, -, -, -, -, -, -,,,8,,9,6, -, -, -, -, -, Economic sentiment index (EU Commision, Euro area) Exports (other (excl.oil&shipping) 6m mov.avg,6 -, -,,,, -,9 -, -,7,,,, 6,8,9 6,7 6, 7,8, 9,, 9,, 9, 8,,,,7,6,6,,,7, Imports (other (excl.oil&shipping) 6m mov.avg -, -, -,,6,,9,,6 7,7 9, 8, 9,, 9,7 7, 7,6 8, 9,9 9, 8, 9, 7, 9, 8,7 7,7 8, 7,6 7, 6,6,6 7,7 7,9 9,, NBG Composite Index of cyclical conditions -,7 -,9 -, -, -,6 -, -,7 -, -8,6-9,8-9,6 -, -,8-9, -, -7, -, -, -7, -7, -6, -, -, -,9 -,,7,,7,,,,7,, Color map scale Sources: NBG, BoG, ELSTAT, EU Commission, IOBE Rapid contraction Moderate contraction Slow contraction Stabilization Slow expansion Moderate expansion Rapid expansion 7 8e 9f Q Q Q Q Q Q Q Qe Qf Qf Qf Qf GDP (real, %, s.a.),,,,,8,,,,7,,7,,,9, GDP (real, % q-o-q, s.a. ),,,,,,, -,,,,8, Domestic Demand (),8,9,,,,, -,7 -,,7,9,7,7,,6 Final Consumption (),6,,,7,,7 -,,,6 -,,9,,,, Private Consumption (),9,9,,,, -,,,,7,,,,6, Gross Fixed Cap. Formation () 9, -,,6 8, -8, 6,, -8,8 9, -,,6 6, 8, 8,, Residential construction -,,8, -8, -, -,8-8,,,,8 Total GFCF excluding residential, -,, 9, -9, 7,9, -9,8, -, Inventories * (contribution to GDP),, -,,8, -, -, -,9 -,9 8,,9 -,, -,7, Net exports (contribution to GDP) -,, -, -,,7,,8,, -, -, -, -,6, -, Exports () 6,9 7,7,6,7 9, 7,,9 8, 9, 7,6,8,,7,, Imports () 7,,8,,7,8,, -7,,7,,9 6,6, 6,, 6,6 *also including other statistical discrepancies / Sources: EL.STAT. & NBG estimates Source: EL.STAT. and NBG Research Estimates Greece: Growth Outlook 7 8e 9f GREECE NBG Macro Flash December 8 p. 6

7 Q Q Q Q year aver. Q Q Q Q year aver. Q Q Q GDP -,7 -,, -, -,,,8,,,,,7, Q:8,,, Domestic demand -,9,,,,7,,,,,8 -,7 -,,7 Q:8,7,9, Final Consumption -, -,9,8, -,,7,,7 -,,6,,6 -, Q:8 -,,, Gross fixed capital formation -8,,,,,6 8, -8, 6,, 9, -8,8 9, -, Q:8 -, -,,6 Exports of goods and services -9, -, 8,9,9 -,9,7 9, 7,,9 6,9 8, 9, 7,6 Q:8 7,6 7,7,6 Imports of goods and services -9, -,9,,,,7,8,, 7, -7,,7, Q:8,,8, Retail sales volume () -, -,,,7 -,6,8,,8 -,,,6,, Sep, Retail confidence (-yr. average: -,8),9,,8, 6,8,8, -,6,,, 6, 8, Nov, Car registrations () -, 9, 6,8,,7 7,8,,8,, 7,6 8,,8 Sep, Consumer confidence (-yr. average: -,) -67, -7, -68, -6, -68, -7,8-7, -7, -,7-6, -, -,7-7, Nov -,8 Industrial production () -,,,,8, 9,,,,6, -,6,6,7 Oct -, Manufacturing production (), 7,8,,, 6,,7,,,8,9,6,8 Oct -, Capacity Utilization (-yr. average: 7,7) 6,9 66, 67, 69,6 67, 68, 68,7 7, 7, 69, 7, 7,9 7, Oct 7,7 Industrial confidence (-yr. average: -9,) -9, -9, -6, -6, -7,8 -,6-7,8 -, -,8 -,6,7 -,, Nov -, PMI Manufacturing (base=) 9, 9, 9, 8,7 9, 7, 9,,8,,,,,7 Nov, Construction permits () -,9 -,9 8, -9, -6,9 6,,,7 6,7 9,,, Aug, Construction confidence (-yr. average: -,) -7, -,6 -,9 -, -7, -,6-8,8 -,9 -, -,6 -, -7, -8, Nov -, PIP Disbursements () 7, 8,,8 -,9 -,8-6,9 -,9-7,,7 -, -,9, -7,6 Oct 6, Stock of finished goods (-yr. average:,6),,,9,,7,7,8,7,, 6,,8 6, Nov 9,8 Current account balance (% of GDP) -,6 -,, -,7 -,7 -,7 -,, -,9 -,8 -,7 -,8,9 Sep, -, -, Current account balance (EUR mn) Sep Services balance, net (EUR mn) Sep 8 Primary Income Balance, net (EUR mn) Sep -9 Merchandise exports non-oil ( cum.) -, -,8,6,6,6 9,, 8,7 9, 9,,,, Sep,9 Merchandise imports non-oil ( cum.),,7,9,,, 9, 8, 8, 8, 7, 9,, Sep 9, Gross tourism revenue (),8 -,7-7,9 7, -6,8-8, 9,,,,,,7,6 Sep, International tourist arrivals () -6, -, 6,,9, -,8 9,,,9 9,7,8,7,8 Sep,9 Unemployment rate,,,,,,6,6,9,,8, 9, Aug 8,9 9, 8, Employment growth (),9,,9,,9,,,,,,7,8 Aug,,6 Headline inflation -,9 -,9 -, -, -,8,,,,8, -,,, Nov,,8, Core inflation,, -, -,7 -, -,,,,,,, -, Nov,,, Producer prices excl.energy -,6 -,8 -,9 -,6 -,7,,,6,,,, -, Sep -, Gov. balance as % of GDP (Enhanced Surveillance Framework),6,,*,* Government debt as % of GDP 78, 76, 8,* 67,8 Revenues Ordinary budget (cum. % change), 6,9 9,7 7,6 7,6, -,, -, -,,7,, Oct,7 Expenditure Ordinary budget (cum. % change) -,,7,,7,7 -,8 -, -,7 -,9 -,9-8,,, Oct,6 Deposits of domestic private sector -,,,6,,,,,6,7,7 6, 7, 7, Oct 6, Loans to private sector (incl. sec. & bond loans) -, -, -,6 -, -, -, -, -,8 -,8 -,8 -, -, -, Oct -, Mortgage loans (including securitized loans) -, -, -, -, -, -, -, -,9 -, -, -, -, -,9 Oct -, Consumer credit (including securitized loans) -,7 -, -,7 -,8 -,8 -,7 -,7 -, -, -, -,6 -,6 -, Oct -, -year government bond yield 9, 8, 8, 7, 8, 7, 6,,, 6,,,, Nov, Spread between year and bunds (bps) , 76 7 Nov USD/euro,,,,8,,7,,8,8,,,9,6 Nov, * according to Budget 9 Sources: BoG, NSSG, MoF, ASE, Bloomberg and NBG estimates unless otherwise indicated Greek Economy: Selected Indicators Real economy ( period average, constant prices) Coincident and leading indicators (period average) External sector (period average) Employment Prices ( period average) Fiscal policy Monetary sector (, end of period) Interest rates (period average) Exchange rates (period average) Most recent 8e 9f GREECE NBG Macro Flash December 8 p. 7

8 NATIONAL BANK OF GREECE Main contributors (in alphabetical order): E. Alevizopoulou, E. Balikou, A. Gouveli, N. Magginas, G. Murphy, P. Nikolitsa. This report has been produced by the Economic Analysis Division of the National Bank of Greece, which is regulated by the Bank of Greece and is provided solely for the information of professional investors who are expected to make their own investment decisions without undue reliance on its contents, effecting their own independent enquiry from sources of the investors sole choice. The information contained in this report does not constitute the provision of investment advice and under no circumstances is it to be used or considered as an offer or an invitation to buy or sell or a solicitation of an offer or invitation to buy or sell or enter into any agreement with respect to any financial asset, service or investment. Any data provided in this bulletin has been obtained from sources believed to be reliable but have not been independently verified. Because of the possibility of error on the part of such sources, National Bank of Greece and/or its affiliates does not guarantee the accuracy, timeliness or usefulness of any information. The National Bank of Greece and its affiliate companies accept no liability for any direct or consequential loss arising from any use of this report. The final investment decision must be made by the investor and the responsibility for the investment must be taken by the investor. This report is not directed to, nor intended for distribution to use or use by, any person or entity that is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to any law, regulation or rule. The report is protected under intellectual property laws and may not be altered, reproduced or redistributed, to any other party, in whole or in part, without the prior written consent of National Bank of Greece. Note: The analysis is based on data up to GREECE NBG Macro Flash December 8 p. 8