Growth in Greece is forecast to remain strong this year and next and above the EU and eurozone average, according to the winter interim economic forecasts released today by the European Commission.

Specifically, for Greece, the Commission predicts constant growth at 2.3% in 2024 and 2025. This forecast is slightly lower for 2024 compared to last November’s forecast (2.4%) and slightly higher for in 2025 (2.2% was the forecast in November).

For the eurozone, the Commission forecasts growth of 0.8% in 2024 and 1.5% in 2025, compared to growth in the EU of 0.9% in 2024 and 1.7% in 2025.

Regarding inflation, the Commission forecasts that in Greece it will decrease from 4.2% in 2023 to 2.7% in 2024 and to 2% in 2025. For the Eurozone, the Commission estimates that inflation will decrease from 5.4% in 2023 to 2.7% in 2024 and 2.2% in 2025. In the EU inflation is forecast to decrease from 6.3% in 2023 to 3% in 2024 and to 2.5% in 2025.

The Commission’s report on the Greek economy:

“Greece’s real GDP is estimated to have grown by 2.2% in 2023, slightly lower than autumn forecasts. After the strong recovery in 2022, consumption growth slowed significantly but remained one of the main drivers of growth last year. Despite tighter funding conditions, investment contributed significantly, thanks to strong construction activity and the implementation of the Recovery and Resilience Plan (RRP). The slower-than-expected recovery of Greece’s main trading partners in the EU affected export growth, but net exports made a positive contribution to growth.

Economic growth is expected to remain broadly flat at 2.3% in 2024 and 2025, broadly as expected in the autumn. Real consumption is expected to expand at similar rates as in 2023, resulting in a slightly lower contribution to real GDP growth. Investment is expected to increase significantly as the implementation of the Recovery and Resilience Plan (RRP) accelerates and financing conditions ease. The composition of gross fixed capital formation is projected to shift from construction to more productive investments such as equipment and machinery. However, investment is likely to trigger higher import demand for both goods and services, which is projected to reduce the positive contribution of net exports in 2024-25.

Annual inflation moderated to 4.2% in 2023. Core inflation excluding energy and food prices was significantly higher at 5.3% in 2023 on average, but fell below the level of inflation, based on the Index consumer price index (HICP) to December 2023. This reflects a progressive moderation in core price demand pressures and a lower than expected pass-through of previous energy and food price shocks.

A tightening labor market, along with the recently announced minimum wage increase (from April 2024), is expected to put some upward pressure on prices, which would partially offset the impact of lower energy prices on inflation. Overall, CPI inflation is expected to decline gradually in 2024 and 2025, to 2.7% and 2% respectively.”