Commission: Greece’s Economy Making Modest Recovery in 2023

City of Athens.

The Greek economy is set to make a “modest recovery” in 2023 ahead after a challenging year, said the European Commission in its latest autumn forecast released this week.

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

More specifically, economic activity is expected to grow by 2.4 percent in 2023, before gradually moderating to 2.2 percent by 2025. Overall, economic growth is projected at 2.3 percent in 2024 and 2.2 percent in 2025.

The Commission attributes its forecast for expansion to the implementation of the country’s recovery and resilience plan, strong tourism performance and a “resilient” labor market.

Headline inflation is projected at 4.3 percent in 2023 and set to moderate to around 2.1 percent in 2025. Tightening labor market conditions however are expected to add to upward pressure on prices.

According to the report, the Greek economy posted solid growth in the first half of 2023, driven primarily by consumption and net exports. Investment activity slowed significantly following a spike in the last quarter of 2022. The impact of the Thessaly floods on overall growth is expected to be limited due to the region’s relatively low share in total value added.

On the back of increasing domestic demand with the full recovery of tourism, real GDP growth for the rest of 2023 is expected to be solid, averaging 2.4 percent for 2023.

Earlier this week, the International Monetary Fund (one of the country’s lenders during its debt crisis) said the Greek economy was expected to expand by 2.5 percent in 2023 driven by strong domestic demand, investments, and EU funds, but growth will slow to 2 percent in 2024.

“High frequency data suggests that overall economic momentum remained robust in the third quarter despite a series of natural disasters,” it said in a statement.

Investments are expected to benefit from over 55 billion euros in EU structural and recovery funds to be channeled into Greece in the coming years.