IMF sees Greece outperforming

With more than a third of the global economy expected to fall into recession this year or in 2023, the International Monetary Fund projected on Tuesday that Greece will keep its gross domestic product in positive territory next year, although not as high as the government expects.

“The worst is yet to come and, for many, 2023 will feel like a recession,” the Fund warned, while specifically for the eurozone it predicted that two countries would move into negative territory, Germany and Italy.

For Greece, the Fund’s forecast is that the GDP will grow by 5.2% this year, against the government’s forecast (in last week’s draft budget) of 5.3%, but also against its own forecast in June (3.5%), in the context of the Article IV report, as mainly tourism improved the data. However, in the fourth quarter it estimates that growth will be limited to 0.7% on an annual basis.

For 2023 its forecast for Greece drops to 1.8%, compared to a government estimate of 2.1% and its own previous forecast of 2.6%. In the last quarter of 2023, it estimates that the pace will have accelerated to 7.5%: That means it will arrive at the average of 1.8% in 2023, the first quarters of the year will be on the brink of stagnation, if not with a negative sign at some point.

Keeping GDP in positive territory is the government’s big challenge for 2023, which is also an election year. Its powerful weapon is the investments of the Recovery Fund and the NSRF, with the draft budget providing for a 16% increase in investments.

So far, all official estimates see Greek GDP in positive territory, although the head of the European Stability Mechanism’s mission to Greece, Paolo Fioretti, hinted last month he did not rule out a slide into a mild recession. Sources indicate that the European Central Bank also sees growth and not a recession for 2023 in Greece, for now at least. However, independent agencies and banks have started to formulate scenarios for a slightly negative GDP in 2023 in Greece as well. On Friday Fitch forecast a marginal contraction of 0.2%.