Finance Minister Christos Staikouras told the cabinet on Wednesday about “indications of a rapid recovery, stronger than originally estimated,” and the majority of analysts are now predicting a growth rate in excess of 4%, although they stress the uncertainty being generated by tourism.
Analysts are also concerned about the outlook for the following years, asking questions about the proper use of the cash from the Next Generation EU fund, and about the multiplying effects of many projects and programs planned on growth.
At the University of Athens, according to Professor Panagiotis Petrakis, the consensus is for a growth rate of 4.2% this year (against a previous estimate of 3.3%), and 5% in 2022 (previously 7%). At Eurobank, chief economist Tassos Anastasatos says an upward revision from the previous estimate of 3.6% is due. The Bank of Greece will leave its forecast for 4.2% growth this year unchanged in its new monetary policy report this Monday, according to sources, but will upgrade its estimate for 2022 from 4.8% to 5.2%. The ministry’s official forecast for 2021 is 3.6% and 6.2% next year.
At the cabinet meeting, Staikouras cited industrial output as a key factor, as it has been growing steadily since November 2020 and posted a 22.5% annual jump in April; he also cited the strengthening of manufacturing expectations (as measured by the Purchasing Managers Index), the improvement in economic sentiment, which has climbed to pre-pandemic levels, the rebound in consumption and the growth in exports and investments reflected in the first-quarter economic data.
Anastasatos notes that the profile of recovery is indeed improving in the short term, thanks to the strong fiscal support, the expansion of vaccinations and the availability of EU cash. “Yet what matters is when the fund’s projects will be implemented, as that will affect growth,” he argues, also pointing to the rather disappointing outlook for tourism.
Petrakis notes that, despite the tourism woes, major factors such as construction and the Elliniko project will play a key part in taking growth above 4% this year.