“Respite” for the Greek economy is the fastest reduction in interest rates by the ECB –

In shielding the high growth rates of the Greek economy in the coming years, the new landscape of lower interest rates that is already prescribed by the ECB’s intentions to accelerate the rate of easing of its monetary policy is expected to contribute.

The strong downward trends in inflation in the eurozone and the alarming forecasts for the course of the German economy, which is expected to slide into recession for the second year this year, create new data that force the ECB to reassess its policy on the rate so far reduction of euro interest rates.

The messages arriving from Frankfurt are foreboding two rate cuts by the end of the yearthe first next week and the second in December. However, to the extent that the good news on the course of inflation is reconfirmed in the next period, new interest rate cuts are expected in the first months of 2025, the extent of which will depend on the course of the European economy, with a focus on the recessionary landscape in the German economy .

Moreover, the new scenario was set by the Governor of the Bank of Greece, Giannis Stournaras, with his statements in the previous days, saying that even after the two reductions expected this year, interest rates will remain high at 3% compared to the lowest levels at which the inflation. To the extent that forecasts are confirmed and inflation approaches 2%, the ECB will have room to further reduce interest rates by 1 basis point, explain economic analysts trying to describe the new data.

What do these developments mean for the Greek economy?

Factors of the economy and executives of the financial staff speak of a particularly positive scenario that helps to continue, without interruption, the development of the Greek economy in the coming years. The boost in private consumption estimated to come from the reduction in household loan servicing costs and cheaper credit to businesses to finance investments will have a positive impact on the GDP growth rate, which according to the draft of the new budget is projected to be formed at 2.2% this year and at 2.3% in 2025. In any case, they are expected to be a counterweight to negative effects that may arise from the stagnation of the European economy and also from potential economic turbulence in the international environment.

The landscape of lower interest rates creates, moreover, favorable conditions for the increase in industrial production which is a requirement for the transformation of the economic model in our country and the creation of conditions for sustainable high growth rates in the future. The developments on this front are already very positive.

According to the latest data from ELSTAT, industrial production increased by 6.7% in the eight months of January – August 2024. This means that manufacturing is recovering from the crisis of the last decade, resulting in an increase in its share in GDP. According to analysts, this is a precursor to a further recovery in exports.

According to the data of ELSTAT, the biggest production increases are shown by the sectors that produce products with high added value, such as the production of chemical products and substances (8.7%), the production of pharmaceuticals (2.1%), the food industry (5.8%), the production of non-metallic mineral products (11.9%), the repair and installation of machinery and equipment (9%), the manufacture of computers, electronic and optical products (4.9%), the manufacture of electrical equipment (4.9%). Other traditional industries such as the tobacco industry (13.9%) and the distillery (7.4%) also show a significant increase.

RES/EMP