The Bank of Greece forecasts growth of more than 8% for 2021. According to the interim monetary policy report released today, in 2022 the growth rate is projected to decline to 5% and in 2023 to 3.9% provided that the economy continues to be strengthened significantly by international tourism, the eurozone recovery and investment acceleration.
However, this forecast is subject to uncertainties and risks related to the evolution of the pandemic, the acceleration of inflation, the possible increase of red loans after the expiration of state support instruments and possibly a low rate of absorption of next generation funds. eu.
There is also still growing uncertainty related to inflationary pressures on raw materials, transport costs and energy. Continued inflationary pressures on imported prices could limit private consumption and growth momentum. At the same time, a faster-than-expected change in the direction of monetary policy in the US could cause strong shocks in the financial markets, adversely affecting the global and Greek economies. .
Regarding the developments in the banking sector, the BoG warns that the decline of non-performing loans in the first nine months of 2021 due to the implementation of the “Hercules” plan does not allow complacency. The systematic recording of new NPLs (Non-Performing Loans) and the fact that the full impact of the pandemic on the quality of banks’ assets is expected to occur with a time lag.
The stock of NPLs at the end of September 2021 amounted to 20.9 billion euros, reduced by 26.3 billion euros compared to the end of December 2020 and by 86.3 billion euros compared to March 2016, when the higher level of MES. The decline in the stock of NPLs during 2021 is mainly due to sales of loans amounting to 26.2 billion euros (due to the utilization of the “Hercules” program), and less to receipts through active management (ie through loan restructuring / arrangements, collection overdue debts, liquidation of collateral, etc.). Also, after the expiration of the installment suspension measures, the banks’ measures to facilitate their customers regarding the repayment terms of their loans helped the reduction of NPLs.
The ratio of NPLs to total loans decreased significantly, but remained high (15%) in September 2021 compared to the European average (2.3% according to data from the European Banking Authority). The coverage ratio of NPLs from accumulated forecasts stood at 43.5%, compared to 44.4% in September 2020.
Commenting on the recent decision of the European Central Bank of 16 December to continue buying Greek government bonds after March 2022 and until at least the end of the reinvestment period at the end of 2024, the BoG commented on acquired by the Eurosystem under the Pandemic Emergency Securities Market Scheme (PEPP), is expected to maintain favorable financial conditions and low borrowing costs for both the public and private sectors. In this sense, it provides a “window of opportunity”, but which must be used quickly in order to obtain the investment grade.
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