The latest economic outlook report from the OECD indicates that the Greek economy is expected to see a growth rate of 2.2% in 2023 and 1.9% in 2024. Despite facing challenges, such as inflationary pressures, the economy continues to show resilience, with fixed investment projected to increase by 8.9% as the implementation of the Recovery and Resilience Fund gains momentum.
The report highlights that actual consumption has been on the rise, supported by robust employment growth. Unemployment is forecasted to decrease from 12.4% in the previous year to 11.2% in 2023, further declining to 10.4% by 2024. Private consumption, however, is expected to grow less in 2023 (1.7%) compared to 2022 (8%) due to reduced household purchasing power resulting from inflation.
Inflation is predicted to decrease from 9.3% in 2022 to 3.9% in 2023 and further to 3.2% in 2024. Core inflation, which excludes energy, food, alcohol, and tobacco prices, is anticipated to rise to 5.5% in 2023 before falling to 3.3% in 2024. The report mentions a decline in prices for electricity, natural gas, and heating, which fell by 27.9% in April from their peak in September.
Labour shortages continue to drive up wages, with wage growth accelerating and the minimum wage rising by 9.4% in April. The report emphasizes that achieving and maintaining the government’s planned return to primary surpluses will help manage inflationary pressures and enhance Greece’s credit rating.
The general government deficit is projected to decrease from 2.5% of GDP in 2022 to 1.5% in 2023 and 1.3% in 2024, while public debt is expected to decline from 170.7% of GDP in 2022 to 163.4% in 2023 and 157.9% in 2024.
The OECD suggests that further efforts should be made to increase employment rates, particularly among women and youth. Measures such as promoting parental leave, flexible working arrangements, and expanding childcare facilities can contribute to improving employment rates for these demographic groups.
The report also notes the reduction of Greek 10-year bond spreads in relation to German bonds and highlights the limited risk of new bad loans due to the freeze on mortgage rates until April 2024 and the prevalence of fixed-rate loans in recent years.
About OECD
The Organisation for Economic Co-operation and Development (OECD) is an international organization comprised of 38 member countries. Established in 1961, the OECD promotes policies that aim to improve the economic and social well-being of people worldwide. It conducts in-depth research, analysis, and provides recommendations on a wide range of economic, social, and environmental issues. The OECD plays a crucial role in fostering international cooperation, setting global standards, and facilitating the exchange of information and best practices among its member countries. Its work covers areas such as economic growth, trade, education, innovation, governance, and sustainability, with the goal of promoting inclusive and sustainable economic development.
