IOBE sees 2024 growth at just 2.1% now

The IOBE was added to the organizations that have downwardly revised their forecasts for this year’s Greek growth, placing it at 2.1%, against a previous estimate of 2.4%, its General Director Nikos Vettas said on Tuesday while presenting the report of the Foundation for Economic and Industrial Research for the first quarter.

The official government forecast is 2.9%, but that is expected to be revised to the region of 2.5% next week, while the majority of agencies put it between 2% and 2.5%.

Vettas explained that significant positive domestic trends are recorded in the short term; however, in the medium term it is unknown whether the Greek economy will see a systematic increase in incomes, if its qualitative characteristics do not change. Right now, he said, “we have a significantly better version of the same economy.” As he pointed out, “it is appropriate for policy makers to propose priorities with a medium-term horizon to strengthen the productive base. In this context, it is important to aim for an orderly labor market through strengthening incentives for participation and substantial training of the workforce. In addition, it is crucial to stimulate productivity through the integration of new technologies and to strengthen innovation through the opening up of the economy to new activities and new entrepreneurship. At the same time, the release and redistribution of economic resources through the faster and more efficient resolution of bad loans will have a beneficial effect. Finally, a prerequisite is the assurance of stability and transparency in the market rules, combined with the drastic simplification of procedures in the public sector.”

The report calls the investment path a “negative surprise” in 2023 (up just 3.9% annually), but predicts an acceleration to 9.5% this year. The “key” is to intensify investments, according to the IOBE head, who added that a positive trend can be seen, but not as strong as is required to take the growth rate to 3-4%.

Vettas further described as a challenge the fatigue that is appearing in labor market indicators, as well as the economic climate, and the broadening of the tax base. “At the same time,” he said, “the criticality of the regulatory role of the state emerges more in the direction of ensuring healthy competition and strengthening the productive base, rather than imposing complex and changing restrictions.”