Macro roundup: Nonsense numbers

The pandemic's impact will linger long in Greece's travel statistics

The striking collapse in tourist revenue in May is no surprise given the country was still in heightened lockdown mode. Nevertheless, some numbers are so gobsmacking that it’s worth taking a pause to chew over them a bit.

A 99.2 percent drop in travel receipts to 13.1 million euros fits into the gobsmacking category. But even that seems mild when looking at the breakdown, where the anomaly of dealing with very small numbers gives us 100 percent revenue declines from France, the United Kingdom, the United States and Russia.

In a recent opinion piece for Kathimerini, Piraeus Bank’s chief economist Ilias Lekkos argued that for a while after this pandemic we’re going to need a new way of talking about macroeconomic data as the havoc will linger on in the numbers for some time.

For example, given April’s collapse in travel receipts to 7.3 million euros, Lekkos says we can fairly confidently predict that the increase in April 2021 will surpass 3,600 percent. Unfortunately, an increase of that magnitude would still leave the number at half of what it was in April 2019.

This is a fair point. So I’ll leave this section with a confident forecast of my own: the percentage increase in May 2021’s travel receipts from France, the United Kingdom, the United States and Russia will amount to infinity.

Financial account

The May balance of payments data also allows us to take a look at what’s happening with the financial account, where we’ve seen that the expansion in the TARGET2 deficit is ensuring that the economic crisis doesn’t turn into a financial one too.

This remained the case through May, though March remains the month that saw the biggest increase. From the Bank of Greece’s monthly financial statement we know that in June the TARGET2 deficit increased another 10.4 billion euros to 66.3 billion euros.

Parsing the rest of the flows under “other investment” is complicated by the reclassification of liabilities after a bank’s securitisation of a loan portfolio in April. But looking at other data from the central bank, we can see that Greek interbank borrowing from the rest of the euro area has steadily declined this year, dropping to 6 billion euros in May from 11.1 billion euros in January.

Debt reprofiling

One area where the pandemic’s impact didn’t show up in the first-quarter data was in nominal government debt, which continued a slow downward trajectory, according to the official figures from Elstat released this week.

This was a quarter in which Greece issued 2.5 billion euros in 15-year bonds, but rather than increasing the country’s outstanding stock of securities this has been in line with the debt management agency’s stated strategy of reducing its outstanding stock of treasury bills. The government’s debt with a maturity of less than a year fell below 10 billion euros for the first time since 2012 in the first quarter.

Bank of Greece data shows the agency continued the strategy of dwindling its T-bill stock into the second quarter. The change feels like something of an end to an era given the stock’s remarkable stability during the country’s debt crisis. The shift also suggests the government needs to be doing much more longer-term bond issuance than it is at a time when yields are at historic lows.

Shrinking funds

Greeks’ disposable income dropped in the first quarter for the first time since 2016, according to Elstat data released today. The 0.4 percent drop from the first quarter of 2019 is sure to be the start of a trend, and to get bigger given that the lockdown only caught the tail end of the period.

Next week’s key data

  • Bank of Greece releases data on bank lending and deposits in June

  • European Commission releases economic sentiment indicator for July

  • Elstat releases May retail sales data

Elsewhere on the web

  • The week’s big news is the approval of the EU’s Recovery Fund. Bruegel has an analysis of how the money is broken down, while Silvia Merler also gives a useful summary on Twitter.

  • Also on Twitter, a summary of how this deal fits in with the debt mutualisation debate. And here’s Chris Marsh again this week on breaking euro area taboos

  • The OECD released its 2020 economic survey of Greece

  • Analysts at HSBC and elsewhere see Greece eventually resorting to the ESM’s pandemic credit line

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