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In the first quarter of 2024, Greece emerged as a beacon of economic resilience, defying earlier concerns and showing strong growth. Growth in 2023 appears to be close to 2.5%, while for the Eurozone it will not exceed 0.6%. A series of strategic reforms and disciplined fiscal policies contributed to the country's positive economic outlook and the recovery of the investment grade. Greece has a world first for 2023 which gives it a big boost in 2024 as well. From around 206% of GDP in 2020, Greek debt is expected to decline this year to around 160% of GDP and further by 9 percentage points in 2024.
Expectations for 2024 are subdued, with the European Central Bank predicting in December only slightly higher growth in the Eurozone than in 2023 (0.8% vs. 0.6%). On the other hand, for Greece, the forecast for growth is 2-2.5%. For inflation, the estimate is that it will move to 2.6% and is mainly due to the reduction in food and energy prices. The prospect of interest rate cuts by the Federal Reserve (FED) and the European Central Bank (ECB) is now visible after 2 years of consecutive increases. This is expected to support incomes and consumption, with unemployment expected to remain low, but this will happen gradually and probably from the second half of the new year.
The new year is marked by the implementation of the new tax bill that was enacted at the beginning of December 2023. The new law is a series of regulations that affect all citizens and businesses, emphasizing especially high incomes and where there are large tax evasion hotspots.
An important pillar of the new bill is the new taxation system for freelancers. The new self-employed tax system takes the minimum wage as a benchmark, considering that a self-employed person cannot earn less than an employee. In other words, the amounts they will now have to declare as income cannot fall short of 10,920 euros/year. Thus, it is predicted that in a moderate way the taxation of the self-employed will increase from 0.8% of GDP today to 1.1% (the European average is 2.2%).
The new bill also introduces new rules on short-term rental properties, incentivizes businesses to implement electronic invoicing, aims to reduce cash transactions to crack down on tax evasion and introduces draconian measures on fuel smuggling.
The measures mentioned above are expected in the medium term to bring additional revenues to the state of €3 billion every year.
Tourism and investments are expected to be key to the economy for another year. The Ministry of National Economy and Finance has set an ambitious target for investment costs of 12.17 billion euros in 2024. The first messages for 2024 from the tourism market are also recorded positively, with airlines and tour operators continuing to include our country in the planning of 2024.
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