In the final draft of the 2022 budget, the Greek government foresees very high growth rates that add up to 11.7% for this year and next. However, it has also opted to act with caution, and hopes to avoid any new handouts or social dividends, as it wants to secure a return to a primary surplus and investment grade as of 2023.
The budget tabled on Friday in Parliament provides for a growth rate of 6.9% in 2021, up from 6.1% in the first draft that was drawn up in early October. This means almost 70% of the 2020 losses will have been covered by the end of December. The projection for 2022 sticks to 4.5%, as in the first draft, taking gross domestic product 1.7% higher than in 2019 by the end of next year.
The main driver of that performance this year has been the impressive rebound of tourism, which is now seen to have come to 55% of the record year back in pre-pandemic 2019, with revenues of 10 billion euros. The other driver has been consumption, which has been funded by the government measures to help businesses and society during the pandemic.
For 2022, the leading role goes to investments, which are expected to grow 21.9% thanks to the contribution of the Next Generation EU fund that will add 2.9 percentage points to GDP, according to the budget. Tourism is projected to come up to 80-85% of the 2019 takings, at €16 billion.
Thanks to the improved growth forecasts, the primary deficit-to-GDP ratio has dropped from 7.7% to 7.3% – some €600 million lower. However, this difference has not been handed out in the form of a social dividend, and government officials do not rule out any new support measures in December.
Sources from the government noted yesterday that the country is not at investment grade yet and Greece will need to be very careful “to keep the economy and society on their feet.” The same sources clarified that there is still the anticipation “of a return to realistic primary surpluses in 2023,” and their level will depend on the decisions of the European Union in 2022.