Commission raises forecast for Greek GDP growth

Brussels sees Greece attaining 1.2% growth this year, expected to rise to 2.2% in 2024

Commission raises forecast for Greek GDP growth

The European Commission upgraded its forecasts for growth and inflation in Greece in its winter report, amid a more general assessment that the European Union economy will avoid recession and that “the peak of inflation is behind us.”

The Recovery Fund and government support measures have boosted the economy, limiting the negative effects of the energy crisis, the report noted, with the government reacting with satisfaction as it prepares for elections and the announcement of new measures. The forecasts “confirm the strong resilience and positive prospects of the Greek economy,” said Finance Minister Christos Staikouras.

The Commission remains, however, restrained and more pessimistic than the government about the growth rate. Specifically, it predicts GDP growth of 1.2% this year, compared to its previous forecast, in the fall, of 1%, but also against the government’s forecast of 1.8%. In 2024, it predicts the growth rate will be 2.2%, against its previous forecast of 2%. For 2022, it revised its forecast down to 5.5%, from 6% in the fall and against the government’s 5.6%, apparently taking into account the poor performance in the third quarter, according to ELSTAT.

EU GDP is seen at 0.8% and that of the eurozone at 0.9% this year.

As noted in the report, growth in Greece this year will be favored by an increase in consumption, thanks to the drop in inflation, but also by an increase in investment, thanks to the Recovery Fund. The Commission talks about “timely and effective implementation” of the National Recovery Plan, which will be the engine of investment spending, compensating for the weakening of private investment, due to the tightening of financial conditions.

On inflation, Brussels’ forecasts are more optimistic than the government’s, though the Commission points to persistent food inflation, while noting that the government hasn’t factored in the potential impact of a minimum wage increase. For this year, it lowered the bar to 4.5%, against its previous forecast of 6% and against the government’s 5%. 

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