EBRD: Greek economy recovers 8.3% in 2021 – Forecasts growth of 2.9% in 2022 and 3.5% in 2023

The Greek economy recovered sharply in 2021, with GDP growing by 8.3% thanks to increased investment and consumption and the partial recovery of the tourism sector, according to a report by the European Bank for Reconstruction and Development (EBRD).

According to the EBRD, tourist arrivals doubled in 2021 compared to 2020, although they were still lower than 2019 levels. Confidence has returned to all sectors of the economy as the economic climate index reached pre-pandemic levels. (114 points) in February 2022 and the PMI is also at high levels in recent months.

The growth dynamics in the entire Greek manufacturing sector has slowed down in 2022, but remains significant, with the production of the manufacturing sector increasing (an increase of 2.6% on an annual basis in January 2022).

Unemployment continued to decline, reaching 13.2% in the fourth quarter of 2021, the lowest rate since 2010, and further declining to 11.9% in February 2022.

However, inflation has recovered significantly during 2022, reaching 8.9% in March. The general government deficit in Greece stood at 7.4% of GDP in 2021, due to extensive support programs due to the pandemic.

While Greece’s public debt remains extremely high, at around 200% of GDP, the relatively low cost of financing from the market has enabled the state to support the economy during the coronavirus crisis.

Looking to the future, the war in Ukraine could affect the economy, not so much through direct connections, but indirectly, through higher energy prices (given the high dependence on energy imports), supply chain problems, rising financing costs, and probably lower-than-expected tourist arrivals if the recession prevails in large Western European countries.

Given these risks, the economy is projected to grow by 2.9% in 2022, by 3.5% in 2023, with the economy also being boosted by increased disbursement of funds from the EU Recovery and Sustainability Fund.