Amidst the international banking crisis, the finance ministry is revising its growth rate this year to 2.3% from 1.8% in the budget forecast.

According to ministry officials, the rapid de-escalation of natural gas prices significantly limits the amount of subsidies for energy, thus increasing the dynamics of the economy, which, in absolute terms, is estimated to be higher by 2-3 billion this year . euro.

In fact, the executives in question state that if the banking crisis had not existed, the estimate for GDP growth would have been higher than 2.3%. “This uncertainty makes us conservative in our forecasts”, they point out.

This is because the turmoil in the banking industry is prompting financial institutions to limit risk-taking, at least until stability returns, in order to protect their balance sheets. Consequently, credit conditions for the real economy will be difficult, even temporarily, not only in Greece, but also on both sides of the Atlantic.

The forecasts for the primary results are also positive for the current year, compared to previous estimates. The forecast to achieve a primary surplus of 0.7% of GDP has a “good base” behind it from 2022. As, the primary budget deficit last year, due to nominal GDP growth (boosted by the runaway run of inflation) , is limited to the level of 1% of GDP (perhaps even lower) against the initial estimate of 1.6% of GDP.

However, the executives of the economic staff do not hide that the difficult things may come from 2024, with the changes in the Stability Pact, which, combined with the “cutter” in primary spending, minimizes the scope for flexible fiscal policy. As, the priority will be to restore the budget to a trajectory of permanent primary surpluses.

A finance ministry official points out that discussions with the institutions to achieve primary surpluses below 2% of GDP (which will not constitute a “loophole” in the real economy) will be started in the autumn by the government that will emerge from the elections. It will be preceded by the submission to the European Commission of the Stability Program (on 30 April) and the Medium-Term Program 2024-2027. Both will include the latest assessments of the course of the economy and the effects on the fiscal figures from the policies already announced and instituted.

It is noted that the financial staff do not ignore that the big “thorn” in the economy remains inflation, especially in food and in general in food items. The recent statements of Finance Minister Christos Staikouras are now typical, that inflation seems to be persistent and he characterized it as the “big problem for 2023”. He added that it will be a little lower than estimates, around 4.5%, but pointed out that “we will not see a reduction in prices, nor a stabilization, what we will see is prices increasing at a reduced rate.” He added that precision is moving away from energy and focusing on food.