Commission Forecasts 6% Growth for Greece this Year and Drop to 1% in 2023

The European Commission is forecasting 6 percent growth for Greece this year, double the eurozone average, but sees high energy costs and inflation leading to a considerable slowdown to 1 percent in 2023.

According to the Commission’s autumn 2022 economic forecast, growth across the EU is set to significantly contract in 2023 as a result of the energy crisis and inflation which are eroding households’ purchasing power and weighing on production impacting at the same time economic sentiment.

Referring to Greece, the report said that despite rising inflationary pressures and a lingering energy crisis, the economy posted a solid 7.8 percent growth rate in H1, compared to the same period last year driven by private consumption and services exports due to a strong tourist season.

Source: European Commission.

It goes on to add that the country’s recovery and resilience plan is expected to bolster the economy, while government support measures to mitigate the impact of soaring energy costs are set to partly cushion the impact of high inflation on businesses and on households’ real disposable income. “These measures will continue until the end of 2023 without, however, hindering primary surpluses in the coming years,” the report said.

More specifically, the Commission is forecasting Greece’s GDP growing by 6 percent this year, dropping to just 1 percent next year and marginally increasing to 2 percent in 2024.

Minister: The Greek economy is growing steadily and strongly

Greek Finance Minister Christos Staikouras. Photo source: @cstaikouras

“The European Commission forecasts confirm that in the midst of the energy crisis and the most intense inflationary pressures in the last decades, the Greek economy is growing steadily and strongly, showing remarkable resilience in the coming years,” said Greek Finance Minister Christos Staikouras commenting on the Commission’s fall forecast.

In both the EU and the euro area, GDP growth is estimated at reaching 0.3 percent in 2023 and by 2024, to an average 1.6 percent in the EU and 1.5 percent in the euro area. In the meantime, analysts note that low growth, high inflation and energy-support measures are set to weigh on deficits.

Source: European Commission.

The report also refers to an “exceptional” degree of uncertainty as a result of the Russia-Ukraine war, the adverse developments on the gas market and the risk of shortages, especially in the winter of 2023-2024.

Additionally, the EU remains exposed to further shocks to other commodity markets reverberating from geopolitical tensions and faceslonger-lasting inflation and potential disorderly adjustments on global financial markets to the new high interest rate environment.

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

“We expect the EU economy to contract in both the current quarter and the first quarter of 2023. This technical recession is set to be broad-based across demand components but also across countries, with a majority of Member States experiencing two consecutive quarters of contraction,” said European Commissioner for Economy Paolo Gentiloni.