The Bank of Greece foresees a marginal acceleration of growth in 2024 and 2025, however keeping its quantitative estimates unchanged.
As stated in the monthly report on the Greek economy published today, according to the projections of the Bank of Greece, as part of the June 2024 Eurosystem experts’ projections, growth is expected to accelerate marginally in 2024 and 2025 mainly due to investments, supported by available European resources and private consumption.
However, the Bank of Greece keeps its quantitative forecasts unchanged, estimating that the country’s GDP will grow by 2.2% this year, and by 2.5% in 2025, and 2.3% in 2026.
As regards to inflationthe BoE estimates that it will slow further in 2024 to 3% due to further declines in the prices of food, non-energy industrial goods and services.
For the fiscallythe BoE estimates that the fiscal policy direction for 2024 is expected to be slightly expansionary, due to the increased investment costs financed by the Recovery Fund.
The BoE continues to see risks to the economic recovery linked to a worsening of the geopolitical crisis in Ukraine and the Middle East, as these developments increase uncertainty and put upward pressure on energy prices.
The BoE, as mentioned in the Report, finds that economic activity continued to expand at a satisfactory pace in 2024, specifically by 2.3% in the second quarter of the year on an annual basis, exceeding the Eurozone average. Falling energy prices led to a decline in inflation in late 2022 and throughout 2023, to 3% in 2024.
Regarding the property prices these are reported to have continued to grow at an accelerating rate in 2022 and 2023.
In the labor market, developments remained positive, with employment increasing.
The balance sheet deficit current account declined significantly in 2023, after widening in 2022, but recorded a deterioration in the first half of 2024.
The 2023 primary fiscal outcome was a surplus of 1.9% of GDP, significantly higher than the target of 1.1%, due to higher tax revenues as well as lower primary spending.
The debt-to-GDP ratio fell by 10.8 percentage points compared to 2022 to 161.9% of GDP due to economic growth and increased inflation.
After easing significantly during 2023, the growth rate of bank credit to businesses has rebounded strongly. The growth rate of household deposits slowed in 2023-2024, under the negative impact of high inflation and the substitution of deposits by other savings options.
With regard to interest rates, it is pointed out that after their significant increase from the second half of 2022, bank lending rates remain high.
Government bond yields and spreads eased as the impact of higher interest rates was mitigated by the upgrade of the Greek government’s credit rating to investment grade.
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