IMF: Greece’s growth at 3.5% this year – Calls for measures in favor of the vulnerable

By Tasos Dasopoulos

Growth that will reach 3.5% for this year despite the crisis and 2.6% in 2023 is forecast by the IMF for Greece, while for inflation it expects a peak for this year but not more than 4.5% and then a decline at 1.3% next year.

In particular, in the spring report on the prospects of its member states (World Economic Outlook) the Fund predicts a slowdown in all developed economies and consequently the Greek one, for which, however, continues to be pessimistic about the medium-term outlook.

Specifically, it predicts for this year growth of the Greek economy by 3.5% which will fall to 2.6% in 2023 and in the medium term until 2027 (after the end of the inflows from the resources of the Recovery Fund) will “land” at 1 , 2%.

The IMF accepts the positive effect that the resources of the Recovery Fund will have and predicts an increase in the total demand of the economy by 2.6% this year and 3% in 2023, while then it expects a decline in the growth rate to 1.8% in 2027.

For the crucial, at this juncture, size of inflation the Fund predicts that in 2022 we will see the peak of price increases with inflation reaching 4.5% on an annual basis from 0.6% in 2021, but with the prospect of a significant decline to 1.3% in 2023. According to the IMF in the medium term, by 2027, inflation will stabilize at 1.9%.

More worrying is the IMF forecast for the current account deficit, which grew by more than 6% of GDP in the midst of the pandemic and will remain at the same level this year and next year, due to the burden of fuel imports and raw materials. materials.

In particular, the current account deficit as a percentage of GDP is expected to decline marginally this year to 6.3% from 6.4% in 2021 and to 6.1% in 2023. By 2027 the deficit is expected to decline to 2, 7% of GDP.

Equally worrying is the forecast for the course of unemployment, which is reduced from 15% in 2021 to 12.9% for this year, but does not have the same course in 2023 when its rate is expected to be at 12.4 % on an annual basis.

Commenting on the report, the IMF said that the scenario in which it bases its forecasts wants the average price of oil at $ 106.83 a barrel in 2022 and $ 92.63 in 2023, but stressing that uncertainty remains high as long as it lasts. and the war in Ukraine, which will cause a global slowdown in 2022.

“Fuel and food prices have risen sharply, with vulnerable groups – especially in low-income countries – being more affected,” the Fund said, explaining the dilemmas.

Greater losses for heavily indebted countries

As the sharp rise in food and fuel prices hits “the most vulnerable social groups”, the Fund calls on governments to take well-targeted measures to protect them.

He also makes an indirect reference to heavily indebted countries, such as Greece, noting that the permanent losses from the current crisis will be much greater in countries with limited fiscal resources (such as Greece) as the follow-up is extremely uncertain.

He explains that there are downside risks to the global outlook, including the possible escalation of the war, the escalation of sanctions in Russia, a sharper-than-expected slowdown in China, and a new outbreak of the pandemic if a new outbreak occurs.

Finally, he points out the risk of social explosions if fuel and food prices remain high for an extended period of time.