BoG sees higher GDP growth
Economy will expand 4.2% in 2022 on the back of higher tourism revenue, central bank says
The Bank of Greece has upwardly revised growth predictions for 2022, though not to the level predicted by Swiss-based investment bank UBS.
The country’s central bank now estimates that the economy will grow 4.2% in 2022, a full percentage point higher than the 3.2% estimate that it included in its monetary policy report released in June. Conversely, it estimates that 2023 growth will be slower, 3.1% instead of 4.1%, and average inflation will be 8%, up from 7.6% in its June estimate.
Earlier this week, UBS had estimated that the economy will grow 5.7% this year.
The chief driver of higher growth is tourism: Earlier growth estimates were based on the assumption that tourism revenue would reach 80% that of record-breaking 2019, also the last year before the coronavirus pandemic. Now, the Bank of Greece believes revenue will equal that of 2019.
According to the bank’s data, tourism revenue in the first half was 5.3% higher than 2019, despite the fact that arrivals lagged by 15.1%. Higher priced made up for the shortfall in arrivals.
Private consumption rose 16.5% in constant prices in the first quarter and, according to recent Alpha Bank research, is not expected to sag off in the second half in response to high inflation.
Also, according to data published Friday by independent statistics authority ELSTAT, retail turnover in the second quarter, at €15.41 billion, was 12% higher year-on-year, partly because of inflation.
A negative development is the higher current account deficit: While exports rose 39.8% in current prices and 5.5% in constant prices, imports rose 49.1% and 22.8%, respectively, with fuels accounting for a large portion of the increase.
Besides higher growth, the government is counting on a significant increase in foreign investment: Earlier in the year, the European Commission had forecast 14.7% growth.
The final second-quarter GDP growth figure will be released by statistics authority ELSTAT on September 7, just three days before Prime Minister Kyriakos Mitsotakis’ keynote economic policy speech at the Thessaloniki International Fair.
