Greek economy expected to grow 2.4 pct in 2020, says Commission report

The European Commission is forecasting a bigger growth for the Greek economy in 2019, a modest growth for 2020, and stable in 2021, based on its report released Thursday.

Real GDP in Greece is forecast to reach 2.4 percent in 2020 (compared with a previous forecast for 2.3 pct) and 2.0 percent in 2021.

The Greek economy is estimated to have grown by 2.2 percent in 2019 (versus an initial forecast of 1.8 pct last fall) and is expected to grow at or above 2 percent over the forecast horizon, “provided that reforms efforts continue to be implemented,” the Commission said.

At a press conference presenting the new forecasts, the EU’s Commissioner for Economy Paolo Gentiloni said he expects the current assessment of the Greek economy in the context of post-bailout monitoring will be positive, “paving the way for a positive Eurogroup decision in June to allow Greece to use the ANFA/SMP [return on profits] for investment purposes.”

In the third quarter of 2019, real GDP growth was 0.6 percent q-o-q (seasonally and working day adjusted, provisional data) and 2.3 percent compared to the same quarter of the previous year.

“This led to real GDP growth of 2.2 percent in the first three quarters of 2019 compared to the corresponding period in 2018,” the report says.

Net exports were again the main driver of growth in the first three quarters of 2019, the report said.

“Despite slower growth in some of Greece’s main export markets, export growth remained resilient, indicating further market share gains, including in the tourism sector.”

Growth in 2019 was also positively affected by strong government consumption growth ahead of the July general election, while private consumption and investment growth remained subdued, the report says.

The services sector continued to be the principal source of growth in the first three quarters of 2019. A recovery in the construction sector also contributed positively to growth in the first half of 2019.

“With business and consumer confidence at pre-crisis levels at the end of 2019 and disposable income increasing, investment and consumption are expected to be the main drivers of growth,” the report says.

Export growth is expected to remain positive but is likely to ease, due to moderate growth in export markets and slower growth in export market shares.