Commission: Greece’s Economic Growth Forecast Above EU Average

European Commissioner for Economy Paolo Gentiloni. Photo source: European Commission

Greece’s economy is expected to grow at a rate that exceeds the eurozone and EU average in 2022, 2023 and 2024 driven in large part by tourism, according to the European Commission’s Spring 2023 Economic Forecast presented this week Commissioner for Economy Paolo Gentiloni.

The Commission upgraded its forecasts for the Greek economy this year, predicting that it will grow at more than twice the European average.

More specifically, the Commission sees Greek economic activity expanding by 5.9 percent in 2022, 2.4 percent in 2023 and 1.9 percent in 2024.

Report analysts attribute the positive prediction to strong tourism activity, a resilient labor market and the implementation of the Recovery and Resilience Plan (RRP).

European Commission forecast for Greece. Source: European Commission.

Staikouras: Greece to continue to show growth rate higher than European average

Commenting on the Commission forecast, Greek Finance Minister Christos Staikouras said it confirms the positive course and prospects of the Greek economy and the effectiveness of the government’s economic policy.

“Our country, despite inflationary pressures and increased uncertainties in the international environment is estimated to continue to show a growth rate significantly higher than the European average in the three years 2022-2024.

Greek Finance Minister Christos Staikouras. Photo source: @cstaikouras.

Greece also appears to be the European champion in investments for the three-year period 2022-2024, with a double-digit increase in investments for 2022 as well,” he said.

Meanwhile, inflation averaged 9.3 percent in 2022 but is set to moderate to 2.4 percent by 2024 due to easing energy prices.

Last year, the Greek economy grew by 5.9 percent despite the energy crisis and associated inflationary pressures driven by strong private consumption, significant investment activity, and the impetus provided by the rebound of tourism during the summer season. Real GDP also increased in Q4 2022 despite widespread price pressures.

According to the Commission, economic activity is expected to slow down in 2023 and further moderate in 2024. Real GDP is forecast to expand by 2.4 percent in 2023 on the back of both domestic and external demand.

Growth in private consumption however is set to slow down significantly compared to the post-pandemic recovery last year amid a loss in household real disposable income and a still negative savings rate.

Commission analysts also note that the full recovery of international tourism to pre-Covid levels is set to boost Greek exports.

Tourists in front of the Hellenic Parliament in Syntagma Square, Athens. Photo © Greek Travel Pages

In 2024, economic growth is projected at 1.9 percent, gradually converging to the longer-term growth potential. Investment is set to remain a key contributor to output growth but at lower rates than in 2021-2023, while household spending is likely to be supported by a potential rise in real income.

Greece’s labor market was resilient despite increasing wage pressures in 2022. Unemployment fell to 12.5 percent and is set to decline to 11.8 percent by 2024.

Real wage growth however is not expected to turn positive before 2024 while consumer prices are set to increase by 4.2 percent and 2.4 percent in 2023 and 2024 respectively.

Overall in the EU

Meanwhile, overall in the EU, the economy remains resilient despite the challenges. Main takeaways according to the Commission’s spring forecast are:

-the EU economy managed to avoid recession

–lower energy prices helped lift the growth outlook

–core inflation has been revised upward but set to gradually decline

–labor market is still resilient against economic slowdown

-public deficits are set to decrease especially in 2024.

However the report does note that downside risks to the economic outlook have increased.

“The EU economy is in better shape than we projected last autumn. We avoided a recession and are set for moderate growth this year and next. Yet risks are too plentiful for comfort: we must remain vigilant,” said Gentiloni.