The Greek economy is projected to grow at a higher rate than the Eurozone, both this year and in 2025, according to a report by the International Monetary Fund on the outlook for the global economy, which was released today Tuesday.

In particular, real GDP is projected to grow by 2.3% this year and 2% in 2025, compared to growth of 0.8% and 1.2%, respectively, for the Eurozone.

Inflation, based on Eurostat’s harmonized index of consumer prices, is forecast at 2.9% at average levels this year and 2% in 2025 compared to 2% and 2.1%, respectively, in the Eurozone

Unemployment is estimated to decrease from 11.1% in 2023 to average levels to 10.5% this year and further to 10.1% in 2025, while in the Eurozone it is expected to increase marginally this year to 6% and decrease to 5.8 % next year.

The current account deficit is projected to decrease from 6.8% of GDP in 2023 to 6.5% this year and further to 5.3% in 2025, while the Eurozone is expected to have a surplus of 3.1% and 3%, respectively.

The global economy

For the global economy, the IMF predicts growth will hold steady at 3.2% both this year and 2025, which is unusual for a period of deflation, but stresses that downside risks – from an escalation of regional wars, particularly in the Middle East and the shift to restrictive policies in international trade – are increasing and now dominating.

The good news, according to the Fund, is that the global battle against inflation appears to have been largely won. After a high of 9.4% year-on-year in the third quarter of 2022, it now expects headline inflation to ease to 3.5% at the end of 2025, slightly below the 20-year average level before pandemic. “In most countries, inflation is now hovering close to central bank targets, paving the way for monetary easing by major central banks,” it says.

Growth remains strong in the US – forecast at 2.8% this year and 2.2% in 2025, much higher than in the Eurozone. However, in the US the fiscal deficit is projected to remain at very high levels and only marginally decrease to 6.1% of GDP in 2029, with the result that its public debt will continue to rise, reaching 134% of GDP in the same year. On the contrary, in the Eurozone, the debt is estimated to have stabilized since this year at 88% of GDP, with differences of course between its countries.

The IMF considers that there should be three changes in the policies followed worldwide.

  • First, a reduction in interest rates, which has already begun and will support activity in a period of labor market slack in many advanced economies. It is noted, however, that vigilance is needed because inflation in service prices remains very high, almost double the pre-pandemic levels.
  • The second change has to do with fiscal policy as “fiscal space is the cornerstone of macroeconomic and financial stability. After years of loose fiscal policy in many countries, now is the time to stabilize debt dynamics and restore the necessary fiscal ‘cushions’.”
  • The third and most difficult change, as noted by the IMF, is the promotion of reforms that will enhance growth. “Much more needs to be done to improve growth prospects and increase productivity,” he notes.