OECD Sees Greece’s Economy Slowing Down in 2023

Photo source: European Parliament

Inflationary pressures, the energy crisis and the ongoing war between Russia and Ukraine have put a damper on Greece’s growth prospects in 2023, said the Organization for Economic Co-operation and Development (OECD) on Tuesday, forecasting 1.1 percent growth this year and 1.8 percent in 2024.

The conservative outlook comes after Greece’ economy grew by 5.1 percent in 2022. The report’s analysts attributed the improved performance to better-than-expected tourism revenues and improving consumer spending and investments.

However, according to the report presented in Athens to Prime Minister Kyriakos Mitsotakis by OECD Secretary-General Mathias Cormann, new market shocks, including soaring energy prices, supply disruptions and geopolitical uncertainty are expected to impact spending and investment this year.

“The war is directly affecting Greece’s energy supply and costs. Its indirect effects are compressing spending and delaying investment and hiring,” the OECD said.

Source: OECD.

Meanwhile inflation reached an almost 30-year high of 12 percent last October diminishing household income and holding back investment activity.

Looking ahead, OECD analysts said EU RRF tools have so far helped mitigate the shocks and are expected to help reignite economic recovery “once [the] security situation and energy prices stabilize”.

“Ensuring the ambitious reform and investment agenda is fully implemented will help to further improve opportunities for businesses and households and will be essential for the Greek economy to navigate past the current headwinds towards a path of sustainable growth,” said the report.