Growth targets are feasible, agree gov’t and ESM

A goal of 3.6% growth this year and 6% in 2022 is realistic, Finance Minister Christos Staikouras and the managing director the European Stability Mechanism (ESM), Klaus Regling, said on Thursday.

Addressing a Economist conference in Athens, the Greek minister said a 3.6% growth rate this year was a realistic target and that Greece has the preconditions to achieve its goal for a strong and sustainable economic growth from 2022, after this year’s recovery, which will be based on investments and exports.

He reiterated that the ministry’s forecast was conservative compared with a forecast made by the European Commission for a 4.3% economic expansion, while banks and other institutions project a growth rate of 5% this year on average.

Staikouras further noted that the Commission’s forecast for a 6% growth rate in 2022 was also higher compared with its forecast for growth in the entire EU.

The ESM’s head said that achieving growth rates of 3.5% this year and 6% in 2022 are goals that are within reach and noted that these were the base scenario of the ESM. He added, however, that risks remain as a new variant of the coronavirus could have a negative impact on tourism.

In any case, he noted, efforts must continue to enhance the growth potential of the Greek economy along with more focused measures for supporting employment and business investments.

Regling said the Greek economy has been more resilient since the start of the pandemic and noted that the country will benefit from the 31 billion euros envisaged by the Next Generation EU fund to finance reforms and investments.

He added that debt sustainability should be held in mind and that Greece should follow a more credible fiscal road after the recovery stabilizes. If this is combined with a commitment to promote reforms, the Greek debt could remain sustainable, Regling said.

German Parliament Speaker and former finance minister Wolfgang Schaeuble agreed at the same event that the Greek economy is on the right track, but noted that Athens needs to continue its reforms to improve Greece’s competitiveness.

He asserted he has always been in favor of the fiscal and economic union and accepted that the Greek people paid a heavy price for the fiscal streamlining.