A growth rate of 2.2%, with a de-escalation of average inflation to 4.4% and a primary surplus of 0.7% of GDP, the Bank of Greece predicts for 2023, in the annual report of the Governor Giannis Stournaras.

According to Mr. Stournara, the biggest risk for the prospects of the Greek economy, in a period of successive crises and increased uncertainty, would be the loss of the credibility of the economic policy, which has been so difficult to recover, and the return to bad practices of past.

Presenting the report, Yiannis Stournaras called for fiscal prudence and emphasized the need for the continuation of reliable economic policies and preservation of reform efforts, by the government that will emerge from the elections. The central banker emphasized the importance of credible fiscal policy to achieve the goal of investment grade recovery, as he underlined, this will have significant benefits for the economy and banks. He added that a prolonged election period that would increase uncertainty could endanger the economy.

“Within a volatile environment of successive crises, it is important to look for constants that strengthen the resilience of the economy and its ability to cope with challenges”, stressed the governor of the Bank of Greece. And he underlined the need to continue sound economic policies, especially fiscal ones, safeguard the achievements of reform efforts and establish a new reform program for the government that will emerge after the elections.

As the central banker noted, Greece managed one of the largest fiscal adjustments in Europe and brought the debt back to pre-coronavirus levels. In particular, the debt was reduced by 35 percentage points compared to 2020, to 171% of GDP for 2022.

At the same time, Mr. Stournaras noted that the fiscal goals of 2022 are estimated to have been achieved, as the additional support measures did not burden the budget. The Central Bank estimates that the primary deficit for 2022 will almost be zero.

In this context, the governor noted that the sustainability of public finances is an important factor for rating agencies, while two of them have upgraded the credit rating one step below investment grade.

Preserving fiscal credibility with primary surpluses at 2% of GDP in the medium term is a catalyst for investment-grade recovery, it noted, with the central banker stressing the benefits of such a development. As he said, the return to investment grade will attract new investors to the bonds, as a result of which the rise of their yields will be restrained in an environment of rising interest rates, while there will be a positive effect for the banks as well, with a reduction in their borrowing costs.