The Greek economy is expected to grow by 4.3 percent in 2021 and by 6 percent in 2022, the European Commission said in its summer economic forecast report released on Wednesday.
The Commission revised its previous forecast for the Greek economy slightly upwards for this year, while its forecast remained unchanged for 2022. For 2021, the forecast is by 0.1 percent higher than the Bank of Greece projection.
More specifically, the EU’s executive said that Greece managed to raise the seasonally-adjusted real GDP by 4.4 percent in the first quarter of 2021, despite restrictive measures implemented in January.
The Commission said that economic growth was mainly driven by net exports, particularly exports of services. On the other hand, private consumption fell 1.3 percent on a quarterly basis, while a scheduled increase in property taxes in 2022 gave a boost to the construction sector.
The Commission said that social distancing measures begun easing early in May, followed by an increase of confidence indicators, while industrial research showed a reappearance of foreign demand for Greek goods.
Greek economy gets boost from recovery plan
A recovery in exports of services is related with the reopening of tourism. Optimistic employment plans in most business sectors are expected to help bring the unemployment rate slightly down in 2021.
Fiscal measures taken earlier in the year, combined with the boost from a national recovery plan are expected to boost domestic demand – the main growth tool in 2021 and 2022.
The annual inflation rate is expected to reach -0.4 percent this year and 0.5 percent in 2022. The Commission said its forecasts were subject to a high level of uncertainty.
The EU Commission’s forecast for growth in Greece is similar to the projections of the Bank of Greece (BoG).
Bank of Greece sees 4.2 percent growth in 2021
The BoG’s monetary policy report for 2020-21, issued in late June, said that Greek economy will grow by 4.2 percent this year, as it had also forecast in its previous report, with growth being particularly strong in the latter half of 2021.
The forecast is higher than the 3.6 percent that had been estimated by the International Monetary Fund (IMF).
The report added that the recovery of the Greek economy has already begun, but warned that “significant challenges” remain.
“The recovery is expected to gain momentum in the second half, driven by pent-up domestic demand, the launch of projects under the National Recovery Plan and an expected increase in tourism receipts relative to 2020,” the central bank said.
In June, the European Commission endorsed Greece’s recovery and resilience plan, totaling 30.5 billion euros ($36.5bn).
Ursula von der Leyen, the European Commission President said she is “delighted to give the EU Commission’s green light to Greece’s €30.5 billion recovery plan. The plan is ambitious and will help build a better future for the Greek people. It can reshape Greece for decades ahead. We need to make the best out of it, for the next generations.”