On Monday, the European Commission proceeded with a major revision of last February’s forecasts for the better. According to the Commission’s spring report, the Greek economy will grow this year at a rate of 2.4%, which is double what it predicted at the beginning of February. A GDP increase of 1.9% is predicted for the year as well.

Recovery Fund, tourism, exports and domestic consumption will give impetus to the Greek economy in 2023, predicts the spring report of the European Commission.

In particular, according to the approach of the Commission and for Greece, with the help of the Recovery Fund, investments will continue to increase, while an acceleration of exports is foreseen as well as an increase in revenues from tourism this year and next year. According to the forecasts, the Greek economy will grow in 2023 by 1.2% and in 2024 by 2.2%. And this year and next year growth in Greece will be stronger than that of the Eurozone, where GDP will grow by 0.9% in 2023 and 1.5% in 2024.

In relation to the other key indicators, unemployment is predicted to decrease again this year and next year, reducing the distance from the Eurozone average, although it will still move at high levels between 11-12%.

Inflation at levels lower than the Eurozone

In the fiscal sector, the Commission foresees a new improvement in Greece both in relation to the deficit and the debt, which will continue their downward trend. In fact, this year Greece will have the second best performance in the general government deficit after Portugal. The Commission attributes the projected improvement to strong growth rates bringing increased tax revenues.

Inflation is expected to be slightly above 4% this year and below 2.5% in 2024, lower than expected levels for the Eurozone and the EU as a whole. However, the decline in food prices will be more difficult, as energy costs still negatively affect production costs. And in the Eurozone there will be a significant drop to 5.6% this year and 2.5% next year. The report also expects a significant increase in investment this year and next year, while an increase in exports as well as imports are also predicted.

Growth with turbulence

Growth in both the Eurozone and the EU as a whole will be better than previous forecasts, confirming the resilience of the European economy. For the Eurozone, the Commission forecasts GDP growth of 1.1% this year and 1.6% next year, and for the EU as a whole 1.0% and 1.7% for 2023 and 2024.
In conclusion, the Commission states that the favorable developments after the autumn forecasts have improved the growth prospects of the European economy for the current year. Continued diversification of supply sources and sharp declines in consumption have left natural gas storage levels above the seasonal average of recent years, while wholesale gas prices have fallen well below pre-war levels. In addition, the EU labor market continued to perform strongly, with the unemployment rate remaining at a historically low level of 6.1% until the end of 2022. Confidence is improving and January surveys suggest that economic activity is also expected to avoid contraction in the first quarter of 2023.

However, the Commission warns that turbulence remains strong. Consumers and businesses continue to face high energy costs, and structural inflation (nominal inflation excluding energy and unprocessed food) continued to rise in January, further eroding household purchasing power. As inflationary pressures persist, tight monetary policy is expected to continue, weighing on business activity and negatively impacting investment.