The European Commission estimates that Greece's economic growth in 2023 will be at 2.4% and continue at 2.2% until 2025, above the eurozone and EU average.
In its autumn economic forecasts released on Wednesday, the Commission noted that that Greece's growth is supported by implementing the Recovery and Resilience Plan and a resilient labour market.
Greece's core inflation is estimated at 4.3% in 2023 and around 2.1% by 2025, as tighter labour market conditions add upward pressure on prices.
The general government deficit is expected to shrink further due to moderate spending growth and higher revenues.
The Commission said that the lower fiscal deficit and steady nominal GDP growth will support the reduction of the high public debt-to-GDP ratio.
According to the Commission, the Greek economy recorded steady growth in the first half of 2023, based mainly on consumption and net exports.
Private consumption benefited from pent-up demand, especially in services, while a significant drop in imports led to a positive contribution from net exports that had underperformed in recent quarters.
Investment activity slowed significantly after picking up in the last quarter of 2022. The impact of Thessaly's catastrophic floods on overall growth is expected to be limited due to the region's relatively low share of total value added.
Due to growing domestic demand with tourism fully recovering, real GDP growth for the rest of the year is expected to be flat, averaging 2.4% for 2023.
Growth forecast for 2024 (%):
🇲🇹 4.0
🇷🇴 3.1
🇮🇪 3.0
🇵🇱 2.7
🇨🇾 2.6
🇭🇷 2.5
🇱🇹 2.5
🇭🇺 2.4
🇱🇻 2.4
🇬🇷 2.3
🇸🇮 2.0
🇪🇪 1.9
🇧🇬 1.8
🇪🇸 1.7
🇸🇰 1.7
🇨🇿 1.4
🇩🇰 1.4
🇧🇪 1.4
🇱🇺 1.4
🇪🇺 1.3
🇵🇹 1.3
🇫🇷 1.2
🇳🇱 1.1
🇦🇹 1.0
🇮🇹 0.9
🇩🇪 0.8
🇫🇮 0.8
🇸🇪 -0.2Autumn #ECForecast ↓
— European Commission (@EU_Commission) November 15, 2023
🍁 Autumn 2023 #ECForecast: Inflation remains on a downward trend. 📉
It is estimated to have declined to 2.9% in the euro area in October, from its 10.6% peak a year ago.
This marks its lowest level since July 2021.
📘 Read the full forecast ➡️ https://t.co/3PSjEccShg pic.twitter.com/f6KL8e7vLC
— EU Economy & Finance (@ecfin) November 15, 2023
🍁 Autumn 2023 #ECForecast: The 🇪🇺 EU general government deficit is projected to decline slightly further in 2023, to 3.2% of GDP, and to 2.8% in 2024, as fiscal support is phased out. 📉
More details ➡️ https://t.co/3PSjEccShg pic.twitter.com/D8U4eKijCn
— EU Economy & Finance (@ecfin) November 15, 2023
Resilient labour market and rising wage pressures
Employment growth is expected to continue, albeit at a slower pace. The unemployment rate is projected to fall 9.6% by 2025, the lowest level in a decade.
The first signs of labour shortages in critical sectors (construction, services) have begun to appear in the labour market. With nominal wages rising and inflation slowing, real worker earnings are expected to turn positive in 2023 after contracting in 2022.
Inflation slows, but pressures remain
Headline inflation is expected to average 4.3% in 2023 and remain above 2% until 2025.
Recent monthly readings show a rise in energy and services inflation (seasonally adjusted every month), while food prices are affected by recent flooding in the Thessaly region, a key area for agricultural production.
In the longer term, expected stronger wage growth associated with a tight labor market is expected to add upward pressure on prices. Consumer prices will increase by 2.8% and 2.1% in 2024 and 2025, respectively.
