Gov’t cuts 2024 economic growth forecast again amid EU stagnation
The government has trimmed its forecast for 2024 economic growth for a second time this year to 2.2%, as stagnation in eurozone countries hits investment and exports, the finance ministry has said.
From projected growth of 2.9% at the beginning of the year, the forecast was cut to 2.5% in April, also because of a wider EU slowdown.
“2024 forecasts are based on data on the weak growth of the European economy in the first two quarters of 2024, especially for the country’s major trading partners, such as Germany,” said the fiscal council, an advisory body to the government.
More than half of foreign direct investment into Greece comes from northern European countries, while two thirds of the country’s exports, such as agricultural goods, fuel and pharmaceutical products, go to the European Union.
The finance ministry also trimmed its growth estimate for 2025 to 2.3%, from 2.5% previously, still well above the eurozone average.
Finance Minister Kostis Hatzidakis told journalists during a presentation of the fiscal plan that “the estimates are very conservative” and in line with European Commission estimates.
Over the medium term, events linked to climate change, including floods and wildfires, will dent economic growth, the fiscal council warned.
“Natural disasters, which often lead to extraordinary costs, could cast doubt over the growth dynamism of the Greek economy in the coming years,” the council said in a press release.
Greece also expects its primary budget surplus – which excludes debt servicing – to reach 2.4% of its gross domestic product (GDP) this year, upwardly revised from the latest forecast in April for 2.1%, and 2.4% in 2025.
It also sees its public debt, the highest in eurozone, to fall by five percentage points to 149% of GDP in 2025, from 162% this year and to 133.4% by 2028.
“In 2028 Greece will not be the country with the highest debt in Europe,” Hatzidakis said.
The country’s short term borrowing costs have plummeted to below those of Italy and France, after it returned to investment grade credit rating in 2023.
Greece’s five-year bond yield was at 2.4% on Monday, 5 basis points lower than the five-year French bond and 25 basis points lower than Italy’s 5-year bond. [Reuters]
