Greece’s economy will grow by nearly 6% in 2022, even with severe energy shortages toward the end of the year, driven by booming tourism and investments, Prague-based investment Wood & Company believes.
Greece may not be at risk of persistent inflation, at least not to the extent that other EU countries face, but is more vulnerable to the risk of stagflation – inflation combined with low growth – and this could affect its credit, rating agency Moody’s says.
The energy supply crisis and rising inflation are endangering the prospects of projects partly financed through the European Union’s Recovery and Resilience Facility, a report by Bank of America warns.
2022 is evolving better than the Bank of Greece forecast for the Greek economy, thanks to the very good performances of tourism, with revenues expected to surpass even the record-breaking year 2019, central banker Yannis Stournaras said on Wednesday, announcing a revision to growth forecasts.
Moody’s on Wednesday issued a warning on the fiscal effects of climate change, arguing that fires and droughts will boost inflation and government spending, hurt tourism and slow growth, developments that are credit-negative for more exposed countries, such as Greece.
The favorable scenario is now becoming the main one for Greece, says a new report by Moody’s Analytics, estimating that the Greek economy will record the third highest growth rate in the eurozone this year, amounting to 5.7%.
As the first rate hikes in the eurozone in 11 years approach, the European Central Bank is deploying its first line of “defense”, the flexible reinvestment of the PEPP program which was activated on July 1, putting more weight on supporting the bonds of the South, partly via “financing” from the bonds of the North.
Greece has not abandoned its plan to issue the first green bond in the history of the Greek state this year, but there are many challenges given the current conditions in the markets, Finance Minister Christos Staikouras and Public Debt Management Agency General Director Dimitris Tsakonas said on Wednesday.
The new anti-fragmentation program of the European Central Bank will reduce the rising borrowing costs of vulnerable countries in the eurozone, such as Greece, while keeping the pressure on governments to pursue prudent fiscal policy, as it will contain relevant conditions, according to ECB head Christine Lagarde.
The government’s goal remains attaining investment grade in 2023, with analysts estimating that it remains feasible, despite the rising cost of debt refinancing caused by the normalization of monetary policy.