Growth to reach 6.2% in 2022

The government is slashing its forecast for this year’s economic growth to 3.6%, after doubling its economic support budget, but also upgrading its projection for the 2022 expansion to 6.2%, according to the data Finance Minister Christos Staikouras presented in Monday’s cabinet teleconference.

The 2021 state budget had provided for a rebound of 4.8% in 2021 (though following a projected 10.5% contraction in 2020 that was eventually contained to 8.2%). The slashing by 1.2 percentage points of this year’s growth rate is attributed to the 15 billion euros of support measures, against an original plan for €7.5 billion, and to the long period that the market has remained closed so far this year, resulting in the widening of the primary deficit and a reduction in consumption.

On the other hand, the ministry expects the economy to improve thanks to the resources from the Next Generation EU fund and the investments that will trigger. The data Staikouras presented showed an anticipated 7% increase in investments in 2021 and a growth rate set to soar to 30.3% in 2022. Exports are also expected to jump, by 10.7% this year and another 13.8% next year.

The ministry is aiming for Greece to exit its enhanced surveillance status in 2022 and for the restoration of investment grade in the first half of 2023. It is also expecting the employment rate to grow 0.7% in 2021, 2.3% in 2022 and 1.3% in 2023 and 2024. That should bring unemployment down from 14.5% in 2020 and 14.6% in 2021 to 10.5% in 2024.

Among the government’s strategic objectives there also are the reduction of the nonperforming loans rate to below 10% by end-2022 and the achievement of fiscal balance through a major reduction of the deficits within 2022, followed by sustainable primary deficits as of 2023.

Staikouras stressed that given this year’s €15 billion of measures, the sum of the state’s support in 2020 and 2021 comes to €39 billion, which amounts to more than a quarter of the country’s annual gross domestic product.