An additional 22 billion euros per year will be required for the next five years for the country to achieve a healthy growth trajectory, according to a study presented on Thursday by PricewaterhouseCoopers (PwC), echoing a similar report by the Hellenic Federation of Enterprises (SEV).
The PwC study explained that this extra 110 billion euros of investments would not lead to an economic miracle, but rather would simply allow the gross domestic product to improve on its current stagnant growth rate and reach 3-4 percent.
The consultancy’s officials expressed pessimism regarding the country’s growth in the years to come. This year, they said, the growth rate will likely fail to make the 2 percent mark regardless of the outcome of the country’s negotiations with its creditors on Greece’s exit from the bailout process and the restructuring of the Greek debt.
The study showed that Greece has over the years of the crisis been deprived of investments worth tens of billions of euros: The gross fixed capital formation rate dropped to 14.7 percent of GDP in the 2008-16 period from an average of 21.3 percent in 1996-2007. In 2016 it amounted to just 11.7 percent, or 20 billion euros, while the European Union average stood at 19.8 percent (if Greece had matched that rate, investment would have amounted to 35 billion euros).
PwC argues that for the country to escape from this state of divestment, it needs an investment shock: The gross fixed capital formation rate must more than double to 42 billion euros per annum, or 208 billion in the years to end-2022. At the current rates of incoming foreign direct investment, with the implementation of the Public Investments Program, the money flow from Brussels and the country’s own assets, Greece will only secure 98 billion euros in investments in the next five years, so there is a shortfall of 110 billion.
The missing capital, PwC officials said, could come from a credit expansion and possible additional funding from European programs. However, Greek investors will be the decisive factor, they argued.