Commission: Strong growth in the middle of a minefield

By Tasos Dasopoulos

Greece is expected to have an average growth higher by 1.63% compared to the EU for the three years 2021 – 2023, as it appears from the winter forecasts of the European Commission.

According to the forecasts published yesterday by the Commission, Europe at average levels will grow until 2023 with an average rate of 4% per year, while Greece with 5.63%. The guides of Greek development will be the public investments that will be financed by the Recovery Fund, the exports and the further recovery of tourism. In particular, Greece will grow at a rate of 8.5%, 4.9% and 3.5% respectively for 2021, (the official report for last year has not been made) in 2022 and 2023, compared to 5.3% , 4% and 2.8% respectively for 2021, 2022 and 2023 that the European Union will develop.

The difference in the speed of economic recovery proves that Greece will move to net economic growth compared to 2019 from the first quarter of the year, while at the end of the three years, GDP after many years of recession or at best stagnation will have increase by 30 billion euros. However, the country’s GDP based on current forecasts will have to wait until 2024 before passing again after many years, the 200 billion euros.

The problem is the twin crisis of inflation – pandemic

However, the road will not be useless, as especially for Greece the era of negative inflation ended after mid-2021. 1% from 1% forecast four months earlier in its autumn forecast in November. In fact, these forecasts predict an outbreak of inflation in the first quarter of the year when it will reach 4.6% to decline from April onwards. It also acknowledges that price increases, mainly in energy products, will create secondary effects by increasing prices for all products and services.

This means that the concept of loss of purchasing power of income, returns on deposits or investments due to inflation is coming back to our lives after 12 years. On the other hand, in public finances the return of inflation will be positive, as inflation not only gnaws on incomes but also figures such as deficit and debt which will now look “smaller” at deflated prices.

In addition to inflation, the Commission does not forget the persistent presence of the coronavirus pandemic through mutations. Although the health crisis does not have the intensity of 2020, since there are now vaccines and drugs to deal with it, it continues to spread and affect the economy.

In fact, especially for Greece, the Commission report points out the risk that a new outbreak of the pandemic near the beginning of the tourist season, could spoil the scenario that wants the tourism turnover for this year to reach 85% – 90% of 2019 After all, Greece has had a bitter experience since 2020 when the outbreak of the pandemic in the spring led the tourism turnover 75% lower than in 2019 and the recession of the economy for the whole year to 9%.

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