Strong growth of 2.1% and inflation at 3% is predicted by the Foundation for Economic & Industrial Research (IOBE) in its quarterly report on the Greek economy, which was presented today, Tuesday.
Regarding unemployment, IOBE estimates that this year it will drop to 10.3%.
Inflation specifically, the report says in Greece will fluctuate slightly higher than the Eurozone average, mainly due to a slower rate of decline in food prices. The incoming tourism for 2024, it is expected to maintain the positive performance of 2023, in real terms.
The dangers
- • Further geopolitical instability and economic uncertainty at regional and international level (war in Ukraine, Middle East, US elections, European Parliament).
- • Slower reduction of interest rates in Europe in 2024, especially in an alternative scenario of a large increase in international energy prices.
- • High deficit in the external balance, with structural characteristics.
- • Labor market: Slower de-escalation of the unemployment rate, partly due to high structural unemployment.
- • Progressively tighter fiscal targets. The tax base in Greece remains narrow.
- • Loss of competitiveness due to higher m.o. of Eurozone inflation after mid-2023. Persistent inflation in essential goods such as food, higher than a.d. of EZ in 2024.
- • High loan-deposit interest rate spread and systematically negative household savings rate.
- • Risk of a new flare-up of overdue debts and NPLs, due to rising interest rates and cost of living. An obstacle to the redistribution of resources are bad loans on and off bank balance sheets.
- • Investment mix: Investments in Housing/Construction and transport equipment, decrease in other sectors.
Positive prospects
- • The acceleration in the implementation of the revised Recovery and Resilience Plan combined with the expansion of its loan arm and REPowerEU, can “unlock” international funds for productive and more long-term investments.
- • The reduction of interest rates, if it starts earlier in the middle of the year, will be an opportunity to accelerate investments.
- • Bet on the strengthened extroversion of the economy, with a gradual improvement of the external balance.
- • Reforms with a medium-term horizon of 2024-2027 may increase productivity which deviates from the average in Europe.
- • The reduction of NPLs at the level of the entire economy will free up productive resources for more efficient distribution.
- • Significant backlog of construction projects.
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