ECONOMY

IMF’s grim forecast for 2022

Growth is seen losing 1.1 percentage points due to war, while inflation and trade deficit soar

IMF’s grim forecast for 2022

The war in Ukraine will increase Greece’s inflation rate and hurt its trade balance, while slowing down the country’s gross domestic product growth by 1.1 percentage points, against a 1.5% impact on the eurozone, according to the International Monetary Fund.

In its World Economic Outlook report released on Tuesday the Fund has revised its overall estimates for the worse: The global economy is projected to expand by 3.6% this year, while the eurozone will see growth at 2.8%. Greece’s growth will be contained to 3.5%, against a previous forecast for 4.6% issued in October 2021. In any case, the 3.5% rate the IMF mission to Athens had also forecast earlier this month is better than the projection the government is expected to submit to the European Commission in the next few days.

For next year, the IMF is forecasting growth in Greece to drop to 2.6%, while the medium-term projection is slightly lower for 2027, at 1.2%, against the 1.3% anticipated (for 2026) in October.

Greek inflation is anticipated to reach 4.5% this year, a far cry from the previous forecast of 0.4% – but still below the revised estimate of the Greek government, which according to sources comes to more than 5%. The eurozone inflation rate is seen at 5.3% before slumping to 1.3% in 2023, mainly due to the comparison with this year’s high level, and then striking a balance at 1.9% by 2027.

Th IMF notes that soaring food and fuel prices will hurt the households around the world which live on low incomes, and warns of social unrest in the poorest countries.

The deficit of the Greek current account balance is expected to climb to 6.3% of GDP this year, the second-worst rate in the eurozone this year after Cyprus’; it will remain high at 6.1% in 2023 and ease to 2.7% by 2027. The previous forecast of the Fund was for a deficit amounting to 5.1% of GDP this year and 3.4% in 2026.

On the other hand, unemployment is seen at 12.9% in 2022, down from a previous forecast of 14.6%.