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Capital controls impact shipowners contribution Greek economy

Capital controls impact shipowners contribution Greek economy

ATHENS: Bank of Greece governor, Yiannis Stournaras, told a gathering of the Union of Greek Shipowners (UGS) last month. However, according to Bank of Greece balance-of-payments data on shipping inflows on the basis of bank transactions data, “a considerable drop in inflows has been recorded since the second half of 2015” said Stournaras. “This drop is primarily due to the imposition of the capital controls and may therefore be reversed once the controls are fully removed,” said Stournaras. He said: “In 2016 in particular, as a result of the capital controls and low freight rates, receipts from sea transport services accounted for a mere 23% of total receipts in the services balance and financed 35% of the goods deficit, while net receipts accounted for 29% of the surplus of the services balance. Available data for the January-September period suggest a partial return, during 2017, to the pre-2015 situation. This upturn may improve further in view of the anticipated relaxation of the capital controls, as well as on the back of higher freight rates in international markets, mainly in the dry bulk sector.”

Stournaras said the shipping industry and maritime cluster can “play a pivotal role in the effort of the Greek economy to recover, contributing to GDP growth both directly and indirectly”. He noted the direct and indirect contribution of the Greek shipping industry to the Greek economy’s total value added was estimated at more than 6% of GDP in 2009, while its contribution to total employment came to about 200,000 jobs. In 2016 shipping receipts declined to 3.3% of GDP, from 6.4% of GDP in 2014, ie one year prior to the imposition of the capital controls.” He said it is “a remarkable achievement” for a small country like Greece to be a leader in global shipping, even though only 22% of the merchant fleet under Greek control is Greek-flagged. Further, he said though the industry faces a number of  new challenges “Greek shipping has good track record in overcoming challenges”. He said that over the medium term, the development of infrastructure projects in the context of the Chinese One Belt One Road Initiative should play an important role in strengthening trade demand, mainly for the dry bulk and container sectors. “After many efforts, a mutually accepted and workable solution has been found for the vast majority of the identified issues, while there is good progress in addressing the remaining ones,” he told the shipowners.