Growth of 3.5% for this year and 3.1% for 2023 is forecast by the Commission for Greece

By Tasos Dasopoulos

The Commission forecasts growth of 3.5% for this year and 3.1% for 2023 in its spring forecast, confirming that next year the Greek economy will show a primary surplus of 1.3% of GDP, marginally higher than 1.1%. of GDP forecasted by the Ministry of Finance, seeing higher and inflation.

In the general commentary on Greece, the report notes the slowdown in the economy due to high inflation and the uncertainty caused by the war in Ukraine, but stresses that the economy will continue to grow both this year and next year, driven by the recovery of tourism, exports and investments.

Specifically, it predicts a better than expected tourist season for this year, estimating that there are prospects for full economic recovery of the sector from 2019 to 2022. In terms of exports, judging by 2021, when despite the difficulties due to the pandemic Greek exports increased by 21.9%, estimates that for this year they will have an increase of 11.6% and 9.6% for 2023 Investments are also expected to increase by 1 4.5% for this year and 8.5% in 2023 .

The disposable income

In terms of disposable household income, the Commission considers that there will be no serious losses due to the 7.5% increase in the minimum wage in May and 9% since the beginning of the year and the continuing increase in employment in industry and agriculture. . In combination with the accumulated savings during the months of the pandemic, he estimates that household income will have a stability in the second half of the year.

Positive for the support of the disposable income considers the suspension of the special solidarity contribution for 2022 but also the reduction of the insurance contributions by 3%, which were implemented as measures of support against the coronavirus in 2021 and are repeated this year.

Inflation at 6.3%

The Commission is more pessimistic about the evolution of inflation, seeing the annual inflation for this year at 6.3% compared to 5.6% forecast by the Ministry of Finance, with a prospect of a decline to 1.9% for 2023 due to high fuel prices and of food. It is noted, however, that high inflation can also affect the tourist season due to the reduction of disposable income inside and outside Greece both this year and in 2023.

Primary surplus of 1.3% in 2023

Nevertheless, the Commission considers that through the gradual reduction of measures to support the economy – amounting to 4.5% of GDP for the pandemic and accuracy – in 2023 the economy can move from a primary deficit to a surplus of 1.3% of GDP .

Regarding the public debt as a percentage of GDP, the Commission estimates that due to the remarkable growth rates it will decrease from 193.3% to 185.7% in 2022 and to 180% in 2023.

The dangers

Finally, the Commission notes that despite the better-than-expected fiscal results for 2021, significant fiscal risks remain for 2022. These include the forfeiture of government guarantees for the 8.3 billion loans granted during the pandemic, the lawsuits against the State Real Estate Company (ETAD) and the pending decision of the Council of State for the cuts in supplementary pensions and gifts to old retirees.