The Bank of Greece forecasts a marginal acceleration of growth in 2024 and 2025 while keeping its quantitative estimates unchanged.

As stated in the monthly report on the Greek economy released today, according to the Bank of Greece's projections, in the context of the June 2024 Eurosystem experts' projections, growth is expected to accelerate marginally in 2024 and 2025, mainly due to investment, supported by available European resources and private consumption.

However, the BoG is keeping its quantitative forecasts unchanged, estimating that the country's GDP will grow by 2.2% this year, by 2.5% in 2025, and by 2.3% in 2026.

As for inflation, the BoG estimates that it will slow further in 2024 to 3% due to further declines in food, non-energy industrial goods, and services prices.

On the fiscal side, the BoG estimates that the fiscal policy stance for 2024 is expected to be slightly expansionary due to increased investment spending financed by the Recovery Fund.

The BoE continues to foresee risks to the economic recovery associated with a worsening geopolitical crisis in Ukraine and the Middle East, as these developments increase uncertainty and exert upward pressure on energy prices.

The BoG, as stated in the Report, notes that economic activity continued to expand at a satisfactory pace in 2024, namely by 2.3% in the second quarter of the year on an annual basis, outperforming the euro area average. The decline in energy prices led to a reduction in inflation at the end of 2022 and during 2023, to 3% in 2024.

With regard to house prices, it is reported that they continued to increase at an accelerating pace in 2022 and 2023.

In the labour market, developments remained positive, with employment increasing. The current account deficit narrowed significantly in 2023, after widening in 2022, but deteriorated in the first half of 2024.

The primary fiscal outcome in 2023 was a surplus of 1.9% of GDP, significantly higher than the target of 1.1%, due to higher tax revenues as well as lower primary expenditure.

The debt-to-GDP ratio declined by 10.8 percentage points compared to 2022 to 161.9 percent of GDP due to economic growth and higher inflation.

After moderating significantly during 2023, the growth rate of bank credit to businesses has rebounded strongly. The growth rate of household deposits slowed down in 2023-2024 under the negative impact of high inflation and the substitution of deposits by other savings options.

As regards interest rates, it is noted that after their significant increase since the second half of 2022, bank lending rates remain high.

The upgrade of the Greek government's credit rating to investment grade has reduced the impact of higher interest rates, which has resulted in a decrease in government bond yields and spreads.