Greek Economic Growth Fuelled by Positive EU Outlook


Economic analysts foresee a promising trajectory for Greece's growth as recent developments in the European Union's economy paint an optimistic picture. Insights from experts familiar with the intricacies of EU economic dynamics suggest that Greece stands to benefit from two key factors driving growth on the continent.

The first piece of good news revolves around the Eurozone's growth rate in the second quarter of this year, which is showing robust signs of acceleration compared to the previous quarter's modest 0.3% growth. The second cause for optimism pertains to inflation, which, despite stagnating at 2.4% in April, is anticipated to follow a downward trend, aligning with the European Central Bank's objectives. This trend potentially paves the way for interest rate reductions, likely in June and possibly extending into July, should the favourable trajectory persist.

This buoyant atmosphere signals a potential exit from the Eurozone's recent technical recession while concurrently witnessing a decline in inflation rates. The envisioned interest rate cuts are poised to bolster disposable income, spur consumption, and stimulate investments across the board.

The optimistic economic climate bodes well for Greece, aligning with forecasts outlined in the Stability Programme. Projections put forth in the program anticipate a growth rate of 2.5% for Greece in 2024, with a further uptick to 2.6% in 2025. These forecasts hinge on several factors, notably a projected rise in private consumption, driven by increased disposable income resulting from wage growth and declining inflation rates.

Private investments are expected to play a pivotal role in Greece's economic resurgence, with the absorption of Recovery and Resilience Facility funds, coupled with lower interest rates and a more favourable economic landscape, fueling a surge in gross fixed capital formation.

As a result, the investment-to-GDP ratio is forecasted to climb to 17% by 2025, narrowing the gap with the Eurozone average. Additionally, fiscal forecasts outlined in the Stability Programme paint a picture of stability, with a projected primary budget surplus of 2.1% of GDP in 2024 and 2025, alongside a shrinking general government deficit and a gradual reduction in public debt.

(Source: iefimerida)

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