The milestones of the economy for 2022

By Tasos Dasopoulos

2022 is expected to be a turning point year for the Greek economy, since in time there are prospects for the efforts of the previous three years to bear fruit both in fiscal and reform level.

The changes that are coming can be concentrated on five key milestones that complement each other, so that Greece returns as an equal member of the Eurozone, leaving behind the remnants of the multi-year economic crisis it encountered at the end and the global crisis from the coronavirus pandemic. . Particularly :

-The start of the Recovery Fund

The first big milestone is the official start of the implementation of the recovery fund of 30.5 billion euros, 106 investments and 68 basic reforms, which puts two big bets: To cover the annual investment of 10-12 billion euros presented by the economy in the last 10 years and at the same time to cure the big patient of the economy, the Greek public, reducing the bureaucracy and increasing its productivity. For 2022, a total of 11 billion euros have been planned for public investments, of which 5 billion euros will come from the Recovery Fund with a large number of investments, related to the digitization of the public sector.

-The change of the production model

The second milestone is the substantial acceleration of the change of the productive model, even if this is not visible at first glance. By 2019, final consumption produced 67.5% of GDP. The first step of change took place in 2020. Due to the crisis, consumption decreased by about 70 billion euros, while at the same time, mainly exports and -less less- investments increased significantly. 2022 will be a time when the share of exports and investments in GDP is expected to increase and the share of consumption will be reduced, although it will also increase in 2022 compared to 2021, by 3%.

The repayment of the debts of the crisis

The third milestone will be the repayment of the debts of the financial crisis. This move includes, in the first phase, the early repayment of the remaining 1.8 billion euros from the loans that Greece took from the IMF from the 1st and 2nd memorandum. At the same time, the early repayment of 5.3 billion euros from the loan of 52.3 billion euros that Greece took from the Eurozone member states, when it signed the first memorandum, is being promoted. The early repayment of the IMF is the first move made by all the countries that implemented the memoranda. Last of all, Greece will do it this year.

The end of enhanced supervision

The fourth milestone is the exit from the enhanced supervision which was imposed exclusively for Greece after the end of the 3rd memorandum in the summer of 2018. This special treatment – as our lenders pointed out at the time – is due to the fact that Greece was a special in case closer monitoring is needed. The lifting of this regime in the summer, four years after its imposition, will send the message to everyone that Greece is no longer the “special case”. Thus, the country will take a big step to be next to the rest of the Eurozone countries.

-Red loans in single digits

The fifth milestone is just as crucial if not more so than the rest of the economy. It is going to reduce red loans to single digits after 11 years. Following the peak of the percentage of red loans at 45.02% (107.2 billion euros) in March 2016, they are expected to decrease in single digits by the end of 2022, something that has been certified by the European Commission. A return to normalcy in this area, on the one hand, will stabilize the banks and, on the other hand, will create new funds to finance the real economy, in a period of rapid growth. In addition, the issue of reducing red loans is one of the requirements of rating agencies to upgrade its indebted economy to investment grade.