The growth of the Greek economy at a rate of 3.5% in 2022 and 2.6% in 2023 is forecast by the International Monetary Fund in its spring report, which was published today.
The forecast for this year is revised down by 1.1 percentage points compared to last October due to the war in Ukraine.
Inflation, based on the Eurostat harmonized index of consumer prices, is projected to reach average levels this year at 4.5% compared to 0.6% in 2021 to fall to 1.3% in 2023.
For unemployment, the Fund forecasts a significant reduction to 12.9% on average year-over-year levels from 15% in 2021 to 14.6% in October.
The current account deficit is projected at over 6% of GDP for both this year and 2023 (-6.3% and -6.1%, respectively).
Forecasts for the world economy
The IMF revised down its forecast for global economic growth to 3.6% for both 2022 and 2023, noting that there are major obstacles to its prospects, mainly due to the Russian invasion of Ukraine.
The biggest impact of the war will be, according to the IMF, Ukraine with a huge reduction in GDP by 35% and Russia, which is projected to reduce GDP by 8.3% this year and 2.3% in 2023 .
For the European Union, the indirect impact of the war is expected to slow the growth of its economy by 1.1 percentage points. Instead, the impact will be much smaller for the US and Chinese economies.
For the Eurozone, a growth rate of 2.8% is forecast for this year and 2.3% for 2023, while for the USA 3.7% and 2.3% and China 4.4% and 5.1%, respectively.
The Fund now predicts that inflation will remain high for much longer. Stresses the risk that inflation expectations will deviate from central banks’ targets, leading to a more aggressive tightening of their policies. Central banks, he says, must “resolutely adjust their policies to ensure that medium- and long-term inflation expectations remain stable.”
On fiscal policy, the report notes that increases in commodity prices and interest rates will further reduce fiscal space, which has already shrunk due to the pandemic.
Many economies, he added, need to make fiscal adjustments, but this “should not prevent governments from providing well-targeted support to vulnerable populations, especially in light of high energy and food prices.”
The Fund points out that increases in food and fuel prices enhance the prospect of social unrest in the poorest countries.
The IMF also points to the risk of a more permanent fragmentation of the world economy into geopolitical blocs with separate technological standards, cross-border payment systems and reserve currencies.
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