There are four main reasons why the Greek economy will remain robust amid the global energy crisis and the war in Ukraine, UBS said in a report on Thursday, adjusting its estimate for the expansion of Greece’s gross domestic product in 2022 from 5.5% previously to 4%.
The Swiss investment bank acknowledges that the local economy is facing headwinds due to the energy and inflation crisis, but it has maintained its positive outlook for the country.
It explains that the adjustment of its projection reflects the smaller carry-over of growth from 2021 compared to expectations and the downward revision of eurozone growth to 2.9% for this year, and that inflation is evolving into the biggest obstacle to growth. Even so, the new forecast by UBS for Greece’s growth remains above the official ones by the International Monetary Fund and the Bank of Greece (3.5% and 3.8%) and the average rate among analysts (3.2%), though the downside risks are the quite likely rise in commodity and energy rates and a further blow to growth and confidence in the eurozone.
UBS identifies the four factors that support its positive take on the Greek economy’s prospects in the face of the current challenges. The first concerns population mobility and economic activity data in the year’s first four months, while business confidence in the first quarter reached its peak since 2000.
The second factor is the improvement in the labor market, which remained unchanged in January-February, along with the increase of the minimum wage, which should boost household incomes.
Another element is the inflow of European Union resources that will continue to constitute the main supporting factor for the economy this year, with some 16 billion euros becoming available for absorption.
Finally, tourism revenues continued to perform well in January-February (up 300% year-on-year), while the early start of the tourism season and the easing of coronavirus restrictions will see the sector record major earnings.