EU Commission sees Greece’s growth rate at 2.2% in 2024 and 2.3% in 2025

Greece’s growth rate will reach 2.2% in 2024 and 2.3% in 2025, the European Commission said on Wednesday in its spring forecasts.

Harmonised inflation is estimated to fall to 2.1% next year while debt will further decline, it added.

“Following a very strong post pandemic recovery, in 2023, real GDP growth was still high at 2%. It remains well above Greece’s long-term growth potential and the euro area average. Economic activity was driven by private consumption, that benefited from rising real disposable incomes, by investment in construction, and by net exports, while inventories were a drag on growth,” the Commission said.

“With pent-up demand largely exhausted, private consumption is now mainly supported by rising real income and it is set to increase at a slightly lower rate in 2024.”

The forecast said labour market segmentation set to slow employment growth.

“Despite still high unemployment, vacancy rates are rising, pointing to increasing labour market shortages in some sectors. Employment is projected to rise further, but the increase is likely to be constrained by labour market segmentation, especially due to skill mismatches, and by a low activity rate.”

Inflation will ease gradually amid persistent prices for food and services, it added.

It noted that the public debt-to-GDP ratio declined to 161.9% in 2023 driven both by the increase in nominal GDP and the surplus of the primary balance.

The ratio is expected to fall further to 153.9% of GDP in 2024 and 149.3% in 2025, helped by increasing primary surpluses, nominal growth and stock-flow adjustments related amongst others to the considerable proceeds from the Egnatia and Attiki Odos motorway concessions. [AMNA]