Τhe Greek economy is expected to grow by 2.2% this year and in 2024, the Parliament Budget Office said in a report released on Tuesday. The report said that the Greek economy grew by 2.1% in the first quarter of 2023 and noted that a slowdown compared with a 7.8% growth rate in the first quarter of 2022 signalled the return of the economy to normal growth rates.
Under the base scenario, the growth rate for 2023 and 2024 will be 2.2%, the inflation rate will fall to 4.6% in 2023 and 2.3% in 2024, although the core inflation remains stubbornly high.
The current account deficit shrank by around 3 billion euros in the January-April period to 5.6 billion euros, but remained up from 4.9 billion in the corresponding period last year. The unemployment rate was 10.8% in May, down from 12.7% in May 2022 with employment up 1.1% and nominal wages up 5.5% in the first quarter.
The report said that the fiscal picture of the first four months of 2023 showed an improvement of 2.5 billion euros compared with the same period last year, reflecting higher tax revenue. The yield of the 10-year Greek state bond fell significantly in the last few months, with the yield spread down 40 basis points from the 10-year Italian bond and up 35 bps from Spanish bonds.
The report expects significant fiscal impact from a fall in the inflation rate this year, although a decline in inflation will slow the growth rate in tax revenue, particularly VAT. The Parliament Budget Office said that lifting of uncertainty and return to normality were preconditions to speed up recovery and regain the investment grade.
It noted, however, that pre-election pledges have raised expectations that the government will have to deal with and recommended that any permanent expansionary measures must have safeguarded funding from permanent revenue sources in advance so that fiscal outlook would not diverge from conditions of public debt sustainability.
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