Greek economy seen growing by 2.9% next year on strong investment

Greece expects its economy to grow faster in 2024 on the back of strong projected tourist inflows, higher investment and domestic demand, the government’s 2024 final budget showed on Tuesday.

The government expects economic output to rise 2.9% next year following a 2.4% expansion this year, partly with the help of European Union recovery funds.

Greece expects to receive more than 55 billion euros from EU structural and recovery funds by 2027, which economists estimate will contribute to 1 percentage point in growth annually. Investment is seen growing by about 15.1% in 2024 more than double compared with this year.

Greece has recently regained investment grade status for its debt attracting investment as its economy strengthens after a decade-long economic crisis. It sold significant stakes in two of its two major banks last week.

“It is the first budget in 13 years that has been drafted with the country having an investment grade,” Deputy Finance Minister Thanos Petralias said in a press release.

In 2024, it expects to achieve a primary budget surplus of 2.1% of gross domestic product – which excludes debt-servicing costs and is crucial for debt sustainability.

Greece emerged in 2018 from a decade-long debt crisis that forced it to accept three international bailouts. Its strong economic performance is also reflected in higher than expected tax revenues.

Next year’s budget includes pay raises for civil servants and pensioners and a 600-million-euros reserve for natural disasters, partly covered from a special levy οn hotels.

The government expects public debt – the highest in the eurozone – to drop to 152.3% of GDP in 2024 from 160.3% of GDP this year, according to the budget submitted to Parliament.

The annual inflation rate is forecast to drop to 2.6% by the end of 2024 from 4.1% this year. Unemployment is also seen declining to 10.6% next year from 11.2% in 2023.

Athens also expects to raise 5.77 billion euros from state asset sales in 2024, the budget said. [Reuters]