OECD for the Greek economy: Plunge in inflation, but also a brake on growth

Significant de-escalation of inflation but also a brake on growth are the 2 main conclusions from the report on the Greek economy published by the OECD.

The agency estimates that 2023 inflation will fall to 3.7% from 9.5% in 2022 and sees it falling further in 2024, close to the 2.3% target and specifically 2.3%

On growth, he is more pessimistic than the Greek government, putting it at just 1.1% this year and 1.8% in 2024 as he predicts that exports will fall by 0.5% this year and the current account deficit will widened to 8.9% this year from 7.1% last year

The public debt from 175.1% of GDP in 2022 it will fall to 170.7% this year and 163.6% in 2024 with the OECD noting that despite its reduction it remains high although its structure combined with fixed interest rates locked at low levels to service limit its direct exposure to market interest rate increases. In its scenarios for the future course of the debt, the OECD points out that if Greece implements the Greece 2.0 program without deviations, if it maintains a primary surplus of 1.5% and obtains an investment grade then the debt will fall to 100% of GDP until 2060.

Among other things, the Organization recommends that Greece maintain annual primary surpluses between 1.5% and 2% after 2023. For this year, it sets the bar a little lower than the budget forecasts, at 0.5% against the government’s 0.7% target while for 2024 he sees a primary surplus of 1.5%.

Among its recommendations is that future interventions on tax rates should focus on maintaining the level of revenue but broadening the tax base, and at the same time calls for regular publication of data on the costs and benefits of all tax breaks and subsidies, with particular emphasis on them relating to fossil fuels.

It also calls on the Greek government not to increase the number of civil servants by using the measure of transfers to cover the various gaps, while for remuneration in the private sector it recommends the strengthening of sectoral contracts against increases in the minimum wage as a key tool for shaping of wages.

The OECD in its report mentions a number of uncertainties that can affect the future course of the Greek economy such as the increase in interest rates by the ECBthe continuation of the Russo-Ukrainian war, a possible new outbreak of the pandemic as well as any additional measures to support households and businesses

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