Commission: Growth of 7.1% in 2021 and 5.2% in 2022 with investment, tourism and consumption guide

LAST UPDATE: 12.18

By Tasos Dasopoulos

The European Commission forecasts growth of 7.1% for this year and 5.2% for 2022 in its autumn forecasts for Greece, guided by investments from the funds of the Recovery Fund and the recovery of private consumption and tourism.

The European Commission in its autumn estimates makes a significant revision from the spring forecast when it forecast growth of 4.3% for this year and 6% for 2022. The forecasts are expected to be higher than those of the preliminary draft budget for growth 6, 1% for this year and 4.5% for 2021 since the executives of the financial staff announce an upward revision of these forecasts. However, it forecasts growth of 3.6% for 2023 compared to the forecast of YPOIK for growth of 4.1%.

Drivers of the fastest economic recovery, according to the Commission, are the increase in private consumption, which after the lifting of restrictive measures for the coronavirus, is expected to increase by 3.3% this year, 2.5% in 2022 and 2, 1% in 2023. Also a significant contribution to the faster economic recovery is the better-than-expected course of tourism. In the field of investment, the Commission is also optimistic, forecasting an increase of 15.3% this year and 13.4% in 2022 and 8.2% in 2023. The basis for the increase in investment will be the utilization of the funds of the Recovery Fund which, as emphasizes will finance the period 2021 – 2023 public investment expenditures that will reach 3.6% of GDP in 2019.

Unemployment, although it will remain the highest within the EU, will continue its downward trend, reaching 15.3% at the end of the year compared to 16.3% in 2020 and will continue to slow down to 15% in 2022 and 14. , 5% in 2023.

Mild increase in inflation

In terms of the current level of inflation, despite the latest increases, the EU predicts that for this year and in terms of a harmonized index of consumer prices, it will not exceed 1% to de-escalate after the fall of prices to 0.4% in 2022 .

Primary surplus at 4% in 2023

In terms of fiscal forecasts, the Commission predicts that the budget deficit will reach 9.9% of GDP this year to fall to 3.9% of GDP in 2023 and 1.1% of GDP in 2023.

In the primary balance we will have a deficit of 7.3% of GDP for this year which will escalate to 1.1% in 2023 to turn into a significant primary surplus of 4% of GDP in 2023.

The slightly worse course of fiscal figures is attributed to the brave support package of 2021 that reached 6.5% of GDP. For 2022, support measures of 1.5% of GDP will be applied (including reductions in taxes and insurance contributions) and measures to curb the revaluations that will have a budgetary impact of 0.1% of GDP for this year and 2022.

Finally, it forecasts a slower-than-expected reduction of debt as a percentage of GDP at 203% for this year (YPOIK forecasts 197.9%) and at 197% for 2022.

As for the risks of its provisions, it mentions the forfeiture of government guarantees on memorandum loans, the recovery of the economy after the withdrawal of support measures and possible court decisions on retroactive pensions. He also mentions for the first time as the fiscal risk factor the new real estate management body of the bankruptcy code.

You can see the Commission’s autumn forecasts in detail in the right-hand column “Relevant Archives”.