Her Eleftherias Kourtali
UniCredit expects strong growth of 4.3% in Greece this year, from 3.9% previously forecast, while for 2023 it places it at 3.5%. Thus, it is the first house that has proceeded to upgrade its estimates for the course of Greek GDP since the outbreak of war in Ukraine. However, as he points out, a high level of uncertainty surrounds the forecasts of the data of the adverse winds that the country is facing due to the escalation of the prices of energy, food and other imported raw materials, which were in a steady upward trend even before the Russian crisis. -Ukraine. Producer prices rose 32% year-on-year in January, the highest level since 2001, while consumer inflation reached 7.2% year-on-year in February, a level not seen since 1996, the Italian bank said.
It is worth noting that UBS in its report yesterday also appeared very positive for the prospects of the Greek economy despite the effects of the war, estimating that growth will move to 5.5% this year, due to the following: a) strong statistical transfer from in 2021 (+ 1.6%), b) the start of the tourist season earlier, c) the preliminary approval for the next tranche of the RRF of € 3.6 billion (with total EU funding of up to € 16 billion available this year, and d) an increase in household savings (household deposits increased by € 19 billion or about 10% of GDP in 2020-2021). According to the Swiss bank, the budget execution continues to outperform with the January-February budget recording a primary surplus of 847 million euros or about 1.1 billion euros better than the target. At the same time, UBS adds that Greece will repay the IMF early (1.9 billion euros left) by the end of March.
According to UniCredit, recent business surveys and economic data suggest that GDP growth, although slowing down, may remain slightly positive in the first quarter of 2022. The slowdown is likely due to shrinking private consumption, firstly, from the sharp rise in the number of Omicron cases and, secondly, the sharp rise in inflationary pressures on household purchasing power.
The government, the house points out, has so far tried to mitigate the effects of inflation on households and businesses by taking advantage of over-reimbursement of budget revenues, but its resources have been almost completely exhausted to pay the March subsidies and the government is unlikely to be able to finance the extension of support measures without resorting to options that would increase the primary deficit – a move that would require approval by the Commission, as noted by UniCredit. Given the strong winds facing the Greek economy, the government strongly supports the idea that the EU should share the cost of the consequences of the Russia-Ukraine conflict on the grounds that it “hits” disproportionately the public finances of the Member States. The idea was considered premature by EU leaders who gathered in Versailles earlier this month, but could gain more support if the crisis continues for several months, the Italian bank said.
According to UniCredit, according to monthly data, the general government deficit (on a modified cash basis) decreased more than expected in 2021 (to 4.3% of GDP after 7.3% in 2020), thanks to over-performance of tax revenues due to higher-than-expected GDP growth. This is likely to lead to a reduction in the overall deficit (as defined by enhanced supervision) to around 7.0% of GDP in 2021.
According to her estimates, the budget deficit this year will be 4.5% and in 2023 at 3.5%, while the current account deficit will move to 4.9% this year from 6.4% in 2021, and at 3.5% in 2023. At the same time, UniCredit estimates that the downward trajectory of the Greek debt will continue from 190% of GDP in 2021, this year it will be at 182.8% and in 2023 at 177.3%. Finally, inflation is set at 3.8% this year and 1.7% in 2023.
Source: Capital
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