Greek economy to grow 2.2% in 2023, says central bank chief

The Greek economy is expected to grow by 2.2% in 2023, according to the country’s central bank chief, who also urged the govenrment to stick to the path of reform and fiscal prudence as it enters a period of increased political uncertainty due to elections.

Greece will hold a general election on May 21, weeks before the conservative government’s term ends. But the vote is unlikely to produce a clear winner, setting the stage for protracted political manoeuvring and a runoff vote.

Athens needs to continue with credible policies to shield its economy from risks which include the impact of the energy crisis and a protracted electoral period, Yiannis Stournaras told the central bank’s annual shareholders’ meeting.

“The biggest risk for Greece’s economic prospects in a period of successive crises and increased uncertainty, would be a loss of credibility on the economic policy implemented, which was so hard to regain, and a return to the bad practices of the past,” Stournaras said.

Greece emerged from international bailouts in 2018, nearly a decade after a debt crisis forced it to seek financial aid from its European peers and the International Monetary Fund in exchange for austerity to stay afloat.

His latest growth projection upwardly revises an earlier central bank estimate for economic expansion of 1.5% this year from 5.9% 2022, reflecting Greece’s fiscal progress.

Stournaras said headline inflation would remain at high levels but was expected to ease to 4.4%, and he confirmed a government projection for a primary surplus of 0.7% this year.

The country, he said, needs to be able to achieve sustainable primary surpluses around 2% of gross domestic product in the medium term, while maintaining fiscal credibility is pivotal for the aim of regaining investment grade and to keep reducing debt, the highest in the euro zone.

“Since 2023 is a year of national elections, to maintain the climate of confidence in the prospects of the Greek economy, prudence and responsibility is required from political forces, that need to support the country’s fiscal goals,” he said.

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