Banking on investment rise
Budget draft provides for 5.6% growth in 2022 and 1.8% in 2023 with reduced primary surplus
The government will rely on public investments to keep the Greek economy in positive territory in 2023 and to ensure higher performance than the European average, as can be seen from next year’s budget submitted to the Parliament on Monday. The Recovery Fund alone will contribute 1.9 percentage points to 2023 growth, which is projected to reach 1.8%.
Overall investment, public and private, is projected to grow in 2023 by 15.5%, up from 10% this year. Public investments in particular are predicted to reach 12 billion euros, setting a 10-year record. Of that, €8.3 billion will come from the Public Investments Program, national and co-financed, and €3.6 billion from the Recovery Fund.
Another €3.4 billion euros will concern loans from the Recovery Fund, raising the total amount of public funds for investments to €15.3 billion. In essence, the strengthening of the state’s investment dynamics in 2023 will be larger, as in previous years part of the Public Investments Program actions dealt with the consequences of Covid-19, while from now on it will concern almost exclusively investments.
In addition to the target of the Recovery Fund and public investments in general, the government is called upon to win the battle of tourism, since the budget is based on the assumption of an increase in exports of goods and services by 1%, which presupposes the maintenance in 2023 of 95% of tourism revenue in 2019, compared to 97.5% this year, around €18 billion euros. With the European economy at a standstill there are question marks over achieving this performance.
The forecast growth rate of 1.8% in 2023 will be a sharp landing from 5.6% this year. But it is better than the 1% in the Commission’s fall forecasts for Greece and certainly better than the 0.3% in the same forecasts for the EU economy. Using the boost from this year’s higher growth, the government has reduced the projected primary deficit to 1.6% of GDP, while keeping unchanged the target of returning to a primary surplus of 0.7% of GDP in 2023.
