Economy to grow 4% in 2022
PM’s chief economic adviser forecasts a new single-party government after next year’s polls
With days left before Prime Minister Kyriakos Mitsotakis’ keynote speech at the Thessaloniki International Fair and the submission of a supplementary budget, the Ministry of Finance is increasingly convinced that economic growth in 2022 will reach 4% instead of the original estimate of 3.1%.
This is in line with the European Commission’s updated growth estimate in its summer forecast.
The prime minister’s senior economic adviser, Alex Patelis, told Bloomberg TV Friday that growth will exceed initial estimates thanks to better-than-expected tourism revenue figures. Current account data released by the Bank of Greece show record receipts in June, despite the fact that arrivals that month stood at 89% of those of the record – and pre-pandemic – year of 2019.
Government officials are awaiting independent statistics authority ELSTAT’s release of gross domestic product for the second quarter (April-June) on September 7, hoping that GDP growth will actually exceed 4%, providing enough leeway for Mitsotakis to promise significant handouts. They caution, however, that the government must have enough reserves to deal with likely energy special needs and add that fiscal policy should also serve the longstanding goal to reach investment grade for Greek debt in 2023. A 4% growth rate is estimated to create so-called “fiscal space” of about €2 billion.
But inflation will also have to be revised upward, to 8.9%, according to the Commission, from 5.6% estimated by the Stability Program devised by Greece and its creditors.
Patelis noted to Bloomberg that the government is cautious when making its estimates, so he hopes that GDP growth will actually exceed 4%. He added that the goal of a primary deficit “around 2%” of GDP remains, as well as the goal to reach investment grade for Greek debt for the first time since the financial crisis broke out in 2010.
“It is very important to maintain our credibility,” Patelis said. “Any fiscal support measures must be measured, targeted and proportional.”
Patelis also touted the country’s political stability. Ruling New Democracy fought against populism and formed a single-party government, he said, adding that this will be repeated after next year’s elections.
