Budget’s investment target seen too high
The Greek government has pinned a large part of its hopes for sustained growth next year on investments, according to its draft budget, though its optimism for an annual increase by 16% compared to 2022 is not shared by foreign firms’ analysts Kathimerini has spoken with.
As they point out, although Greece has made significant strides on the investment front, they do not consider the country to be the investment hot spot envisioned by the government for 2023, and this due to the deteriorating external environment and trust in general.
“Greece is seeing very positive developments on the investment side, even though in this case we have a more conservative view than the government’s. We forecast a sizable increase of fixed investment in 2023 of more than 7%, despite the recession, led by Next Generation EU and government support,” forecasts Paolo Grignani, senior economist at Oxford Economics, undercutting the budget’s estimate.
“A point that is going under the radar is that foreign direct investment in dollars is at a record high, a positive sign from international investors. However, there are several downside risks that may cloud really quickly the environment for investments: above all, the war in Ukraine and the rise of geopolitical tensions with Turkey,” he observes.
Fabio Balboni, director-senior European economist at HSBC, is even more conservative in his projections: “Despite the support from NGEU, we think investment will ease next year (+5.2%) relative to this year, due to the deteriorating external outlook and confidence,” he notes.
For DBRS Morningstar Vice President for Global Sovereign Ratings Spyridoula Tzima, the course of investments depends on continued reforms: “Investments especially in high value-added sectors that create new jobs are important steps in improving economic prospects. At the same time, the investment gap remains high. Greece performs weakly in the World Governance Indicators such as Control of Corruption and Rule of Law compared to its euro area peers. The continuation of reforms that improve the business environment, the performance of public administration, the judicial system, the institutional framework, a simple and competitive tax system, political stability and predictability are multiple factors that create good conditions for investments,” she says.
