Greece: Revision of the forecast for growth of the Greek economy at the end of 2021

The European Commission revised the forecast for growth of the Greek economy to 7.1% from 4.3%. A key element of the review will be the better-than-expected performance of tourism, which was favored on the one hand by the opening of the economy and the full operation of the industry, mainly from July onwards, but also by the fact that tourists who visited Greece spent about 30% more money on their vacation. There was also an extension of the tourist season which significantly boosted tourism revenues. Total exports of goods and services are at historically high levels both in terms of GDP and value, while they are expected to be even higher in 2022. The Greek business sector is moving dynamically in 2021, which is estimated to cover a large extent during the year the sales losses of the pandemic (amounting to approximately € 40 billion). 

The fourth quarter of 2021 closes with the new outbreak of the pandemic for Europe and with inflation threatening the economically vulnerable classes. The Greek government has rejected the idea of a new lockdown that would be disastrous for the economy and society. The measures taken to deal with the pandemic are to strengthen the national health system with staff and to limit those who choose not to be vaccinated. 

In the field of economy, although the forecasts are positive for the end of 2021, the Ministry of Finance must face the problem of inflation. The large price increases, mainly in the energy sector, create problems for both businesses and households. The majority of estimates for Greece estimate inflation a little over 4%, which will be maintained until the end of the second quarter of 2022 and then will begin to de-escalate rapidly. 

To protect households from rising energy prices, the finance minister announced a subsidy on electricity and gas bills. The aim is to offset the increases with the subsidy. Other measures that concern both households and businesses are the abolition of some taxes and fees, the reduction of income tax advance, the increase of real estate tax repayment installments, the interest subsidy on loans and the reduction of VAT rates on specific activities. It is positive that the above measures will be maintained in 2022 as shown by the state budget submitted by the financial staff for a vote. 

The purpose for the Greek economy is to close the year 2021 with the greatest possible growth in order to reduce the losses from the pandemic and the inflationary tendencies. 2022 is promising, as a stable growth rate is forecasted and in combination with the assistance from the European Stability Fund and the completion of investments, the country’s GDP is expected to reach pre-pandemic levels. These positive developments in the indicators of the economy as pointed out by expert analysts will soon begin to be seen in the daily lives of citizens.