Healthier tourist flows to Greece over the summer helped the Greek economy reclaim a significant part of Covid-19-induced losses, said the European Commission this week, forecasting overall real GDP to grow by 8.5 percent in 2021.
In its European Economic Forecast Winter 2022, the Commission is also expecting the Greek economy to expand by 4.9 percent in 2022 and by 3.5 percent in 2023, driven by investment activity mainly supported by the EU’s resilience and recovery tool.
The estimates are revised upward compared to November’s outlook from 7.1 percent growth in 2021 but downward from 5.2 percent in 2022.
Real GDP in Greece grew by 2.7 percent in the third quarter of 2021, reflecting solid export performance and improving private consumption. The industrial sector has also rebounded strongly, said the report.
Looking to 2022, the Commission expects consumer spending to return to pre-pandemic levels, boost private consumption and in turn support growth.
It also expects tourism to continue recovering previous losses and return to pre-pandemic levels.
Report analysts stress however that risks remain high particularly with regard developments on the pandemic front, which can impact tourist arrivals.
Commenting on the news, Finance Minister Christos Staikouras said the Commission forecasts confirmed “the excellent course of the Greek economy and its positive prospects”.
“The country is recovering losses incurred during the health crisis; investments and exports are strengthened; unemployment is shrinking, citizens’ disposable income is stimulated… the country is achieving a stronger recovery in 2021 – the second largest in the eurozone – recouping almost all of 2020 losses,” he said.
Staikouras added that the country’s recovery is supported by high and sustainable growth for both 2022 and 2023 – the second highest cumulatively in three years, and that Greece recorded the lowest average inflation rate in the euro area in 2021.
Europe Recovering Covid Losses
For Europe, meanwhile, the Commission projects a 5.3 percent expansion in 2021, with the EU economy growing by 4.0 percent in 2022 and by 2.8 percent in 2023. Growth in the euro area is also expected at 4.0 percent in 2022, dropping to 2.7 percent in 2023.
According to the winter report, the EU as a whole reached pre-Covid GDP levels in the third quarter of 2021 with all member states set to have passed this milestone by the end of 2022.
“As the pandemic is still ongoing, our immediate challenge is to keep the recovery well on track. The significant rise in inflation and energy prices, along with supply chain and labor market bottlenecks, are holding back growth,” said Valdis Dombrovskis, executive vice-president for an Economy that Works for People.
Dombrovskis noted, however, that the EU economy had regained all the ground it lost during the height of the crisis, thanks to successful vaccination campaigns and coordinated economic policy support, adding that unemployment had now reached a record low.
“Looking ahead, we expect to switch back into high gear later this year as some of these bottlenecks ease. The EU’s fundamentals remain strong and will be boosted further as countries start to put their recovery and resilience plans into full effect,” he said.