EU resources vital for growth
Economy to revert to pre-pandemic levels by the end of next year, the government estimates
The government’s stability program provides for Greece’s gross domestic product to return to levels similar to those before the pandemic hit by the end of 2022, and possibly even higher: The economic growth rate is projected to come to 3.6% this year and accelerate to an impressive 6.2% in 2022 with the help of the Next Generation EU fund.
However, the risks are still there, the program acknowledges, in accordance with the accompanying report of the Hellenic Fiscal Council. These risks include an extension in the pandemic and a delay in the lifting of restrictions or even a fourth wave of the coronavirus; delays in the implementation of the recovery plan; weak balances for banks that would prevent the smooth flow of credit to the economy; and a weakness of the private sector to respond to or invest in innovative sectors.
The situation would have been far worse without the support measures: The 2022-24 program submitted to the European Commission on Friday says the contribution of the measures to the 2021 GDP comes to 4%. It mentions that the total value of the support measures will run up to 40.7 billion euros (including €23.1 billion in 2020, €15.6 billion this year and €2 billion from the extension of the measures into 2022). Their fiscal cost, not counting the liquidity measures, comes to €27.9 billion (€11.6 billion in 2020, €14.3 billion in 2021 and another €2 billion next year).
This year’s 3.6% growth rate will incorporate the contribution of 1.3 percentage points from the Next Generation EU resources, down from a previous estimate of 2.1 percentage points in the 2021 budget. Thanks to the NGEU, investments will grow 7%, and tourism revenues will amount to 45% of the record year of 2019, the program estimates. Unemployment will be almost unchanged, at around 16.3%.
Next year the NGEU is projected to send investments soaring 30.3% in 2022, leading to the 6.2% growth rate expected. The economic expansion is expected to come to 4.1% in 2023 and 4.4% in 2024.
