European Commission Sees 2.2% Growth for Greece in 2019

Athens, Greece. Photo Source: Visit Greece / Y. Skoulas

The European Commission is forecasting further growth for the Greek economy in 2019, on the back of a 2 percent growth rate increase in 2018 and following the completion of its bailout program last August.

More specifically, according the Commission’s quarterly economic forecast released last week, real GDP growth is forecast to reach 2.2 percent and 2.3 percent in 2020 – an upward revision compared to the EU executive body’s November estimates.

The positive performance is attributed to exports and stronger private consumption supported by a significant increase in employment. The report goes on to note that consumer confidence nearly recovered to pre-crisis levels in 2018, and private consumption is likely to drive growth this year as well.

The tourism sector, the report said, is expected to “face slowing demand growth and renewed competition from Turkey” while goods exports may weaken.

The Commission’s analysts however are quick to underline that a growth rate of over 2 percent this year is directly linked to the full implementation of reforms.

“By taking advantage of spare capacity and benefiting from strong external demand, Greece managed to increase its market shares in global trade. Net exports thus became the main driver of growth in the first three quarters of the year, and (likely) for the whole year as well,” the report said.

Investment, meanwhile, was subdued compared to 2017, “in part due to a base effect from the revision of the annual national accounts”, the report said, underlining however that activity in the real estate sector and investment in housing grew throughout the year.

Inflation is projected at 0.8 percent for 2018, 0.7 percent in 2019 and 1.3 percent in 2020.

In the Commission’s autumn report, inflation was estimated at 1.2 percent this year and at 1 percent in 2020.

EU Forecast

At the same time, the Commission said it expects slower growth for the eurozone, set to impact major economies, such as those of Italy and Germany, attributing the decline to geopolitical tensions, a slowdown in the Chinese economy, and Brexit.

Eurozone growth is forecast at slowing to 1.3 percent in 2019 from 1.9 percent in 2018, and expected to rebound in 2020 to 1.6 percent.

According to the report, unlike the Union’s larger economies, growth is expected to continue in all other EU member states albeit at a slower pace, making a seventh consecutive year of expansion.