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LOOKING FOR DIFFERENT COUNTRIES? D&B Country Risk Services group provides analysis on over 130 countries worldwide which are available to be purchased online. If you wish to order individual reports using your subscription please click the link and follow the on screen instructions, alternately please contact Customer Services at your local D&B / Partner office. For further information please e-mail us at CountryRisk@dnb.com |
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The 'DB' risk indicator provides a comparative, cross-border assessment of the risk of doing business in a country and encapsulates the risk that country-wide factors pose to the predictability of export payments and investment returns over a two year time horizon. The 'DB' risk indicator is a composite index of four over-arching country risk categories:
Political risk - internal and external security situation, policy competency and consistency, and other such factors that determine whether a country fosters an enabling business environment;
Commercial risk - the sanctity of contract, judicial competence, regulatory transparency, degree of systemic corruption, and other such factors that determine whether the business environment facilitates the conduct of commercial transactions;
External risk - the current account balance, capital flows, FX reserves, size of external debt and all such factors that determine whether a country can generate enough FX to meet its trade and foreign investment liabilities;
Macroeconomic risk - the inflation rate, government balance, money supply growth and all such macroeconomic factors that determine whether a country is able to deliver sustainable economic growth to provide further expansion in business opportunities.
The DB risk indicator is divided into seven bands, ranging from DB1 through DB7. Each band is subdivided into quartiles (a-d), with an 'a' designation representing slightly less risk than a 'b' designation and so on. Only the DB7 indicator is not divided into quartiles.
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Country Overview:Greece is a Mediterranean country between Europe, Asia and Africa. The country has land borders with Albania, Bulgaria, Macedonia and Turkey. It joined the EU in 1981, and is working to improve relations with Turkey, with which it has had a troubled relationship in the past. Since the restoration of democracy in 1974, politics has been dominated by a socialist and a centre-right party. The parties are controlled by several family dynasties, which has tended to encourage patronage and cronyism. The trade union movement, which has Socialist Party ties, and the Greek Orthodox Church are also highly influential. Tourism and shipping are among the most important sectors of the economy. Structural reforms, the introduction of the euro, and the organisation of the Olympic Games in Athens in 2004 contributed to buoyant economic growth until 2008, which helped to close the income gap with Western European countries. However, economic activity has weakened again in the wake of the global financial crisis and the global economic slowdown, while concerns about the country's dire state of public finances have re-emerged. |
| Minimum Terms: | SD |
The minimum form of documentation or trading method that D&B advises its customers to consider when pursuing export trade with the stated country.
| Recommended Terms: | SD |
D&B's recommended means of payment. The use of recommended terms, which are generally more stringent than minimum terms, is appropriate when a customer's payment performance cannot be easily assessed or when an exporter may wish to limit the risk associated with a transaction made on minimum terms.
| Usual Terms: | 30-120 days |
Normal period of credit associated with transactions with companies in the stated country.
| Local Delays: | 0-2 months |
The time taken beyond agreed terms for a customer to deposit money in their local bank as payment for imports.
| FX/Bank Delays: | 0-1 month |
The average time between the placement of payment by the importer in the local banking system and the receipt of funds by the exporter. Such delays may be dependent on FX controls, FX availability and the efficiency of the local banking system.
According to D&B’s latest proprietary cross-border payments performance data, 29.2% of payments arrived 30 or more days over terms in 2009. Around 62.4% of payments were paid promptly in the same period, while 17.3% of payments were paid 60 or more days over terms. Some 4.5% of payments were paid after a delay of 120 days or longer. Hence, D&B recommends the use of SD terms when trading with counterparties in the country. Meanwhile, Intesa Sanpaolo SpA, Italy’s second-largest bank, plans to shut its investment-banking unit in Greece (which offers fixed-income sales and advisory services); it will keep one office in the Greek capital to advise clients on bond sales. This development again highlights the unfavourable business environment in the country.
| US Eximbank | Full cover available |
| Atradius | Full cover available |
| ECGD | Full cover available |
| Euler Hermes UK | Full ST cover available |
| 2007 | 2008 | 2009e | 2010f | 2011f | |
| Real GDP growth, % | 4.5 | 2.0 | -2.0 | -1.0 | 0.1 |
| Inflation, annual ave, % | 3.0 | 4.2 | 1.3 | 2.3 | 2.5 |
| Govt balance, % GDP | -3.7 | -7.7 | -12.8 | -12.0 | -10.8 |
| Unemployment, % | 8.3 | 7.7 | 9.3 | 10.0 | 10.6 |
| C/A balance, % GDP | -14.3 | -14.4 | -11.2 | -9.8 | -9.1 |
The "Long-Term Interest Rate" chart tracks ten-year government bond yields.
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Exchange Rates
(London, 22 Feb 10)
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Local Currency
(Euro [EUR]:USD)
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Long-Term Interest Rate
(%, per annum)
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| Data Table | ||||||
| Jul 09 | Aug 09 | Sep 09 | Oct 09 | Nov 09 | Dec 09 | Jan 10 |
| 4.89 | 4.52 | 4.56 | 4.57 | 4.83 | 5.51 | 6.05 |
| 3.4 | 3.3 | 3.3 | 3.2 | 3.2 | 3.2 | 3.3 |
D&B is downgrading Greece’s country risk rating by one quartile from DB3c to DB3d in response to a deteriorating economic outlook and increasing socio-political risk. The centre-left Pan-Hellenic Socialist Movement (PASOK) government, led by George Papandreou, faces the most exceptionally difficult fiscal situation in decades. In an effort to improve its public finances and reduce its public deficit by at least 4 percentage points this year (to 8.7% of GDP from an estimated 12.8% in 2009), the government has unveiled a new series of austerity measures, beyond those already outlined in its Stability and Growth Programme (SGP), a four-year fiscal plan submitted to the EU. In particular, Prime Minister Papandreou announced a range of public spending cuts and tax adjustments, as well as tax and pension reforms, sparking a new round of strikes by labour unions, which has caused serious disruption to fuel supplies and further hampered cross-border trade. Greek bond yields also spiked and stocks on the Athens bourse have tumbled amid investors’ concerns that the industrial action may prevent the government from pushing through the much-needed reforms.
Although the EU has pledged its strong support to the country, helping to lower the risk of sovereign default, it is mounting pressure on the PASOK government to introduce additional budgetary measures in order to ensure the full implementation of its SGP. In response, the government has started to put together a EUR2.5bn plan to ease concerns over the debt crisis and secure access to liquidity by the end of April, when it will need to borrow more than EUR20.0bn. However, by adopting stricter fiscal measures to close the budget gap (such as a scheduled, further increase in taxes), the local economy could experience a more severe recession than we had forecast this year as fiscal tightening is likely to increase the downward pressure on growth.
The domestic economy contracted by more than expected in Q4 2009, illustrating the fact that the country still faces broader economic problems in addition to its fiscal woes. According to preliminary data by the National Statistical Service, real GDP fell by 2.6% year on year in Q4, while data for previous quarters were revised downwards. The revision showed that real GDP contracted by 2.0% in 2009, making it the worst recession in nearly 30 years. Given the new data, we expect the economy to shrink by 1.0% in 2010 and possibly emerge from recession in 2011. Meanwhile, in order to boost the economy, the government has outlined a EUR1.5bn programme of investment in environmentally-friendly technologies, which will be jointly funded by the public and private sector, and the EU. However, the need for fiscal adjustment curbs the government’s ability to adopt more measures to support a return to growth.
DEFINITIONS
Minimum Terms:
The minimum form of documentation or trading method that D&B advises its customers to consider when pursuing export trade with the stated country.
Recommended Terms:
D&B's recommended means of payment. The use of recommended terms, which are generally more stringent than minimum terms, is appropriate when a customer's payment performance cannot be easily assessed or when an exporter may wish to limit the risk associated with a transaction made on minimum terms.
Usual Terms:
Normal period of credit associated with transactions with companies in the stated country.
Local Delays:
The time taken beyond agreed terms for a customer to deposit money in their local bank as payment for imports.
F/X Bank Delays:
The average time between the placement of payment by the importer in the local banking system and the receipt of funds by the exporter. Such delays may be dependent on FX controls, FX availability and the efficiency of the local banking system.
C/A (current account) balance, % GDP:
Part of the balance of payments that records a nation's exports and imports of goods and services, and income and transfer payments.
DSR (debt service ratio), %:
Annual interest and principal payments on a country's external debts as a percentage of exports of goods and services.
Govt balance, % GDP:
The balance of government expenditure and receipts.
Real GDP growth, %:
GDP adjusted for inflation.
Inflation, %:
The increase in prices over a given period.
GLOSSARY
CiA Cash in Advance
CLC Confirmed Letter of Credit
CWP Claims Waiting Period
FX Foreign Exchange
LC Letter of Credit
LT Long term
MT Medium term
OA Open Account
SD Sight Draft
ST Short term
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