Commission: At 2.2% the growth of the Greek economy in 2023 – 2024-02-15 18:46:09

Against 2,2% the actual increased GDP of Greece in 2023, instead of its original estimate 2,3%according to its winter forecasts European Commission.

A strong recovery may have been recorded in 2022, but consumption growth slowed significantly but remained one of the main drivers of growth last year, Commission technocrats noted.

“Despite tighter financing conditions, investment contributed significantly, thanks to strong construction activity and the implementation of the Recovery and Resilience Plan (Recovery Fund). The slower-than-expected recovery of Greece’s main trading partners in the EU affected export growth, but net exports contributed positively to growth,” they point out.

Economic growth is expected to remain broadly flat at 2.3% in 2024 and 2025, broadly as expected in the autumn. Real consumption is expected to expand at the same level in 2023 as well, resulting in a slightly lower contribution to real GDP growth.

The investments are expected to increase significantly as the implementation of the Fund accelerates and as financing conditions are eased. The composition of gross fixed capital formation is projected to shift from construction to more productive investments such as equipment and machinery. However, investment is likely to trigger higher import demand for both goods and services, which is projected to reduce the positive contribution of net exports in 2024-25.

Forecast for inflation

The annual inflation based on the Harmonized Index of Consumer Prices (HICP/HICP) moderated to 4.2% in 2023. Structural inflation excluding energy and food prices was significantly higher at 5.3% in 2023 on average, but fell below the level of HICP inflation until December 2023.

This, according to experts, reflects a progressive containment of demand pressures in core prices and a lower than expected pass-through of previous shocks in energy and food prices.

The tightening of the labor market, together with the recently announced increase in the minimum wage (from April 2024), is expected to put some upward pressure on prices, which would partially offset the impact of lower energy prices on inflation. Overall, inflation is expected to decline more gradually in 2024 and 2025, to 2.7% and 2% respectively. This is marginally lower than in the autumn forecasts in both years.

Weaker base

At the European level, after sluggish growth last year, the EU economy entered 2024 on a weaker footing than expected, according to the Commission. The European Commission’s winter interim forecast revises growth in both the EU and the euro area to 0.5% in 2023, from 0.6% forecast in the autumn forecast and to 0.9% (from 1.3%) in the EU and 0.8% (from 1.2%) in the euro area in 2024. In 2025, economic activity is still expected to expand by 1.7% in the EU and 1.5% in the euro area.

Inflation is expected to slow faster than forecast in the fall. In the EU, inflation according to the Harmonized Index of Consumer Prices is forecast to decrease from 6.3% in 2023 to 3.0% in 2024 and 2.5% in 2025. In the Eurozone, it is expected to slow from 5.4% in 2023 to 2.7% in 2024 and to 2.2% in 2025.

An extremely difficult year is behind us

EU Finance Commissioner Paolo Gentiloni said among other things: The European economy left behind an extremely difficult year, in which a combination of factors severely tested our resilience. The expected recovery for 2024 is projected to be more subdued than projections three months ago, but to gradually accelerate thanks to slowing price increases, rising real wages and an exceptionally strong labor market.

Investments are expected to be sustained, influenced by the easing of lending conditions and the flow of MAA funding. In 2025, growth is expected to be stable and inflation to fall close to the ECB’s 2% target. Geopolitical tensions, an increasingly volatile climate and some critical electoral processes around the world this year are factors that increase uncertainty around these prospects.

The European economy is emerging a bit weaker

At the same time, Executive Vice President for an Economy in the Service of People Valdis Dombrovskis stressed: After a traumatic 2023, the European economy is emerging a little weaker than expected, although the recovery is expected to accelerate gradually this year and through 2025. Inflation continues its broad decline; rising real wages combined with a resilient labor market are expected to support consumer demand. EU funds, including the MAA, will continue to play a vital role in terms of investment.

However, the global landscape remains highly uncertain. We are closely monitoring geopolitical tensions, which could have a negative impact on growth and inflation.