The International Monetary Fund (IMF) on Tuesday revised upwards its forecast for the Greek economy this year to 2.6% from its autumn forecast of 1.8% in October 2022, and said the Greek economy was expected to grow by 1.5% in 2024 from 1.4%.
The IMF, in its spring World Economic Outlook report, said this revised growth forecast will allow the continuation of falling unemployment to 11.2% this year and to 10.4% in 2024 from 12.2% in 2022. The inflation rate is projected to fall significantly to 4.0% this year and to 2.9% in 2024 from 9.3% on average in 2022. The country's current account deficit is expected to fall to 8% of GDP this year, from 9.7% in 2022, and to 6% of GDP in 2024.
The improved growth outlook for Greece comes amid a volatile recovery of the global economy, with the IMF noting that global growth outlook for the next five years was the lowest in some decades.
This forecaste comes after the Bank of Greece revised upwards its forecasts for Greek economic growth this year. Yannis Stournaras, the central bank's governor, presenting the bank's annual report, said that the Greek economy will grow by 2.2% in 2023 and the inflation rate will fall to 4.4%. The state budget is expected to record a primary surplus of 0.7%.
The central banker, however, stressed that the economy faced challenges and threats mainly because of a deteriorating external environment but also from the prospect of a prolonged pre-election period. Stournaras noted that the Greek economy has shown remarkable progress. In 2022, the GDP grew by 5.9%, exceeding the pre-pandemic levels in absolute terms.
Foreign investment inflows in the last two years reached a 20-year record, reflecting renewed confidence in the outlook of the Greek economy. The inflation rate reduced household incomes, but the unemployment rate fell below 2010 levels thanks to reforms which boosted flexibility in the labour market. The current account deficit grew to 9.7% of GDP in 2022, but this development was attributed to temporary factors, Stournaras said, adding that exports have doubled compared with 2010.
The country debt was 171.4% of GDP, down 35 percentage points from 2020. Stournaras said that 2022 budget targets have been achieved and that the primary deficit will be almost eliminated. Commenting on the banking sector, the central banker said the return of banks to profitability was remarkable. "The banking sector is in a better position to absorb any turbulence from international markets," he noted.