Greece's growth potential remains above the euro area and EU average in 2024 and 2025, according to the European Commission's spring economic forecasts released today.

GDP growth in Greece is expected to reach 2.2% in 2024 and 2.3% in 2025, supported by exports, investment, and private consumption. The Commission's forecast for GDP growth in 2024 in the euro area is 0.8% and 1% in the EU, while for 2025, GDP is projected to accelerate by 1.4% in the euro area and 1.6% in the EU.

Inflation in Greece is expected to moderate to 2.8% in 2024 and 2.1% in 2025, the same level as in the euro area.

The general government deficit is expected to shrink further, thanks to moderate expenditure growth, and the public debt ratio is expected to remain on a downward path.

In particular, the Commission's report on Greece stresses that economic activity in the country will gradually accelerate thanks to stronger investment.

"After a very strong recovery after the pandemic, in 2023 real GDP growth was still high at 2%. Real GDP remains well above Greece's long-term growth potential and the euro area average. Economic activity was driven by private consumption, which benefited from rising real disposable income, investment in construction, and net exports, while inventories were a drag on growth," the report said.

The report noted that real income growth is currently the main driver of private consumption in Greece, and it anticipates a slightly slower rate of growth in 2024. The projected gradual easing of financing conditions and the accelerated implementation of Recovery Plan projects are expected to boost gross fixed capital formation, which is expected to rise from 4% in 2023 to 6.7% in 2024. The gradual recovery in external demand is also expected to boost exports. However, accelerating investment growth is expected to trigger higher import demand. Thus, net exports are likely to be growth-neutral, and the current account deficit is projected to narrow only moderately over the projected horizon.