The economy of Greece will grow at a slower pace in 2023 after a strong rebound this year largely fueled by the tourism sector. The country’s economic output is seen increasing by 2.1% next year from 5.3% this year, based on the government’s 2023 draft budget published on Monday.
Greece’s Draft Budget
Greece’s draft budget for 2023 which was tabled in Parliament on Monday envisages a growth rate of 2.1 percent and a primary surplus of 0.7 percent of GDP.
According to the report, the state budget’s primary deficit will reach 1.7 percent of GDP in 2022, down from a target for a deficit of 2.0 percent while the 2022 GDP growth rate will rise to 5.3 percent from a target of 4.5 percent.
The 2023 draft plan includes fiscal support measures worth 3.5 billion euros and an additional one billion euros in reserve to deal with increased spending on the energy crisis.
After tabling the draft plan in Parliament, Finance Minister Christos Staikouras and Alternate Minister Theodoros Skylakakis said that the 2023 budget was drafted in conditions of extremely high uncertainty over geopolitical developments globally.
The new budget tries to deal with challenges such as the energy crisis, inflationary pressures on households and enterprises, the health crisis, and increased defense spending. At the same time, it is designed to maintain fiscal balance and meet sustainable growth targets along with supporting a wide range of reforms, the ministers said.
The budget foresees inflation in Greece at 8.8% in 2022, 3% in 2023
The report said that the country’s harmonized inflation rate is expected to grow by 8.8 percent this year, up from a target of 5.6 percent, and the unemployment rate is projected to ease to 12.9 percent from 13.9 percent.
The government disbursed nine billion euros in energy support and health support measures along with reforms to support citizens. These included a double increase of the minimum wage by 9.7 percent in 2022 and lower taxes.
The government expects the 2023 harmonized inflation rate to grow by 3.0 percent and the economic growth rate to reach 2.1 percent. These estimates could be revised by the European Commission before the government tables its final budget plan to Parliament.
The 2023 budget is the first to be drafted outside the memorandum supervision or the enhanced surveillance status.
The 2023 draft plan also envisages funds worth 8.3 billion euros from the Public Investment Programme and 5.6 billion from the Recovery Fund.