UBS remains bullish on the Greek economy, noting that GDP remains on track to meet its forecast for 2.5% growth in 2024, despite recent weakness in Eurozone indicators. Analysts also predict 2024 will be another year of fiscal outperformance, and talk of scope for further declines in government bond yields and sustained momentum for bank stocks.

WHAT THEY SEE

In more detail, the four reasons UBS remains positive on the Greek economy are:

• The new growth data: Last year, Greece's economic growth failed to meet forecasts mainly due to delays in absorbing EU funds, and the impact of the flooding in Thessaly. This year, however, UBS believes the data remains consistent with its forecast for GDP growth of 2.5%, which is 60 basis points above consensus and 30 basis points above the government's latest (and downwardly revised) official estimate of 2.2%
• The fiscal outperformance: UBS believes that the government is on track to achieve its upwardly revised primary surplus targets of 2.4% and 2.5% of GDP for 2024 and 2025 respectively (versus the 2.1% primary surplus projections in the 2024 Stability Programme). This result is mainly due to better tax collection (exceeding the target by €2 bn. ), reflecting stronger corporate and personal income tax collections due to the strong economic recovery and anti-avoidance measures.
• Reduction in bond yields. Greece's economic outperformance relative to other Eurozone peers is expected to be sustained next year, with GDP/debt levels expected to fall further to around 152%-153% from 162% in 2023. Also, accelerating interest rate cuts by the ECB and the Fed are expected to support European bond maturities and Greek securities. UBS's year-end target is a 3% yield on Greek bonds and 2.7% by the end of 2025.
• Strong momentum in bank stocks: Having initiated coverage in July on systemic Greek banks with "buy" ratings on all four, UBS remains positive on the sector, expressing a preference for National Bank and Piraeus Bank. UBS has given a price target of €2.32 for Alpha Bank, €2.74 for Eurobank, €11.20 for National Bank and €5.70 for Piraeus Bank.