Greece Sees Economy Growing by 2.9 Percent in 2024

Greece expects its economy to grow by 2.9 percent next year from 2.4 percent in 2023, according to the final budget plan for 2024 tabled in Parliament on Tuesday.

The budget plan will be discussed in the Parliamentary Economic Affairs Committee before a parliamentary debate begins on December 13th, while a vote is scheduled for December 17th.

The budget plan envisages that the inflation rate will fall to 2.6 percent on average in 2024 from 3.9 percent, and the unemployment rate will drop to 10.6 percent from 11.2 percent.

Private investments will rise by 15.1 percent in 2024 from 7.1 percent in 2023, exports of goods and services are projected to rise by 5.6 percent (2.7 percent this year), and imports of goods and services are expected to rise by 4.6 percent (2.2 percent in 2023).

Economy to grow at a faster pace than European average

The strong resilience of the Greek economy, as reflected in 2022 and 2023, is projected to be confirmed in 2024, with the economy growing at a faster rate compared with the European average growth rate, the budget plan says.

It adds that this strong dynamism will lead to positive performance despite the economic uncertainty prevailing on a European and global level. A foundation for the positive outlook of the Greek economy will be adherence to prudent fiscal policy, which will lead to a further upgrade of the country’s credit rating. The economic performance of structural reforms, currently under way, will contribute to the strengthening of fiscal stability and a further reduction of public debt.

Real GDP is projected to reach 233.8 billion euros in 2024 to the highest level since 2010. The Greek economy is expected to surpass the EU average growth rate by 1.7 percentage points with the domestic labor market expanding to the highest level in fourteen years.

The Greek budget envisages measures to support lower incomes and to boost economic activities by focusing on combating tax evasion and reducing imbalances.

These measures include an increase in public servants’ wages, raises in pensions, increasing tax-free allowance by a thousand euros for families with children, raising the minimum guaranteed income by eight percent, expanding maternity benefits, continuing the youth pass, and other benefits.

Risks for the economy in Greece in 2024

Short-term risks for the Greek economy in 2023 and 2024 included any further slowdown of the European and global economy, adverse international geopolitical developments, persisting high inflation, a renewed energy crisis, extreme climate phenomena, continuation of a strict monetary policy by ECB, and slow absorption of Recovery and Resilience Funds.

The 2024 budget focuses on the introduction of significant reforms that will lead to a further growth of the Greek economy, safeguarding achievement of fiscal goals. These reforms focus on raising incomes, supporting vulnerable social groups, restricting tax evasion. It also includes permanent measures to fortify the country against the climate crisis.

The budget envisages a primary surplus of 4.991 billion euros or 2.1 percent of GDP in 2024 and a cash revenue from privatization totaling 5.771 billion euros.

The general government debt is expected to fall to 357 billion euros or 160.3 percent of GDP by the end of 2023 from 356.6 billion or 172.6 percent in 2022, and it is projected to reach 356 billion euros, or 152.3 percent of GDP, in 2024.

Fiscal projections are subject to risks and uncertainties, related to geopolitical developments in Ukraine and the Middle East. These developments could have a significant impact on international economic activity, especially through energy prices.

Other factors of uncertainty are a strict monetary policy followed by central banks with the aim to tame inflationary pressures. The budget plan includes an adverse scenario of a one percent decline in the nominal growth rate of GDP compared with the basic scenario.

Related: IMF’s Key Findings and Recommendations for Greece