EBRD Projects 7% Growth for Greek Economy in 2021

The Hellenic Parliament in Athens. Photo © Maria Theofanopoulou

The European Bank for Reconstruction and Development (EBRD) is forecasting 7 percent growth for the Greek economy in 2021 and 3.9 percent in 2022, in its latest Regional Economic Prospects report released on Thursday.

Overall, the EBRD lifted its growth estimate for the 37 countries in its region, forecasting a sharp rebound in the first half of the year which will lift region-wide growth to 5.5 percent in 2021, but warned that rising energy costs and slow Covid-19 vaccination progress were hampering prospects ahead.

The report also found that among its regions, South Eastern EU and Western Balkan economies were posting the fastest growth rates in 2021 and the biggest upward revisions since the June forecasts.

Looking to 2022, the EBRD predicts that Greek GDP will increase by 3.9 percent as the country recovers and important infrastructure projects move forward.

The report’s analysts warn, however, that significant downside risks remain, including the course of the coronavirus pandemic and its impact on tourism and other services.

According to the EBRD, the Greek economy is on path to a strong rebound after it shrunk by 9 percent in 2020. GDP in Q1 (first quarter) 2021 grew by 4.5 percent on a quarterly basis and by 3.4 percent in Q2. 

Growth has in large part been driven by the tourism sector, which performed better than expected in 2021 but is still well below 2019 record levels.

Meanwhile, Greece’s fiscal policy, the EBRD said, should remain focused on addressing the Covid crisis, with the deficit likely to exceed 7 percent of GDP for a second year in a row.

Key to growth is the effective implementation of EU recovery funds and NSRF (ESPA) resources, said the EBRD.

“The rapid growth of the economy so far in 2021 is a very positive sign and it is encouraging to see the strong focus on the green and digital agenda in the Greek recovery plan, which predisposes positively for a future sustainable development,” said Peter Sanfey, deputy director for Country Economics and Policy, Department of Economics, Policy and Governance EBRD.