Despite a continued fragile economy, Greece is in line for a GDP rebound this year, driven by investment demand, higher private consumption and increasing exports.

According to a new country report by Atradius, exports of agricultural goods such as olive oil, vegetables and fruit as well as petroleum, pharmaceuticals and aluminum products are expected to increase on the back of higher external demand and improved international competitiveness compared to some European peers such as Portugal and Spain.

In June, eurozone finance ministers agreed to provide Greece with another €8.5bn from the international bailout fund. The money will be used to enable Athens to repay €7bn of debt to the European Central Bank (ECB), due in July. The payment is still subject to parliamentary approvals in some countries.

The terms of the total €86bn financial aid programme to Greece remains contingent on the implementation of agreed, and highly contested, economic reforms. The austerity measures in conjunction with the current bailout scheme include higher taxes, increased social security payments and debt repayments.

Last year Greek GDP showed a modest rebound of 0.3%. This is expected to grow up to 2.7% this year, given full implementation of the European Stability Mechanism (ESM) funding programme.

Greek banking

The Greek banking sector continues to be negatively affected by a high percentage of non-performing loans (NPL) at around 37% of gross total loans. Progress to clean up NPLs has been slow, and the recently adopted insolvency and debt-enforcement legislation, which, for example, allows for NPL sales, still needs to be fully implemented.

Payment delays have decreased in 2016 compared to 2015, however, in 2017 no major improvement is expected.

On a positive note, business insolvencies are expected to see a 2% decrease this year, having seen yearly increases since 2008 and despite levels remaining more than five times higher than pre-crisis levels. Across the sectors, food and IT/electronics are expected to see less failures, while construction, textiles and machines sectors are forecast to remain high with no decreases expected.