Greek economic growth will remain robust, OECD says

The survey said that in the last quarter of 2022 and early 2023, real consumption continued its growth, reflecting a strong increase in employment, while unemployment is projected to fall from 12.4% last year to 11.2% in 2023 and to 10.4% in 2024

Greek economic growth will remain robust with real GDP growth projected at 2.2% in 2023 and 1.9% in 2024, the Paris-based Organisation for Economic Cooperation and Development (OECD) said in its economic outlook survey released on Wednesday. More specifically, the OECD said that economic growth remains strong despite headwinds with fixed capital investments expected to grow by 8.9% helped by the implementation in the framework of the Recovery and Resilience Fund.

The survey said that in the last quarter of 2022 and early 2023, real consumption continued its growth, reflecting a strong increase in employment, while unemployment is projected to fall from 12.4% last year to 11.2% in 2023 and to 10.4% in 2024. Private consumption is expected to grow less than in 2022 (1.7% from 8%) because of a decline in households’ purchasing power due to inflation. The country’s harmonised inflation rate is steadily falling since September 2022 but has obtained a wider base. The inflation rate is projected to fall from 9.3% in 2022 to 3.9% this year and to 3.2% in 2024, while core inflation – excluding energy, food, alcohol and tobacco prices – is projected to rise from 4.6% last year to 5.5% in 2023, falling to 3.3% in 2024. Energy prices fell by 27.9% in April from September 2022 levels.

Continuing shortages in the workforce are pushing wages higher, the OECD said, with the minimum wage up 9.4% in April after rising by around 10% in the first half of 2022. Achieving and sustaining primary surpluses – around 1% of GDP this year and 2% in 2024 – will help Greece to manage inflationary pressures and regain investment grade, the survey said, adding that the general government deficit will fall from 2.5% of GDP last year to 1.5% this year and to 1.3% in 2024. Public debt will continue falling from 170.7% of GDP in 2022 to 163.4% in 2023 and to 157.9% in 2024. The OECD noted that the use of any non-projected revenue or lower spending on public debt could help in reducing inflationary pressures and to achieve the goal of regaining investment grade. The country’s current account deficit is projected to fall to 9.5% this year and to 8.7% in 2024. The survey stressed that the risk of creating new non-performing loans because of higher interest rates is contained by an agreement between Greek banks to freeze mortgage loan interest rates until April 2024 and by a relatively high percentage of new loans with stable interest rate.