The Bank of Greece sees a slowdown in growth in 2023, after the better than expected 2022, according to the estimates of its governor Giannis Stournaras, as these will be reflected in the interim Report on Monetary Policy that will be published today.
According to information, the central banker will emphasize the need to achieve the non-negotiable national, as he describes it, goal of returning the country to investment grade next year.
According to him, the orientation of the economic and fiscal policy should move in this direction, as its effects on all sectors of the economy will be beneficial, he will note in his message.
Therefore, he will emphasize that the necessary interventions to support businesses and households by the state should be targeted and temporary, within the framework of the available fiscal space.
In this context, according to the governor of the Bank of Greece, salary increases must take into account the potential of the economy and not further fuel the rise in prices, so as not to ultimately undermine the progress achieved in terms of competitiveness in last decade.
Referring to the outgoing year, Mr. Stournaras will highlight the fact that macroeconomic performance was better than expected, despite the unfavorable environment following the outbreak of the war in Ukraine and the energy crisis.
This is because the economy was fueled by both private consumption and investment, with tourism and shipping making a significant contribution to achieving high GDP growth rates. Besides, government subsidies also played an important role in dealing with punctuality.
Growth slowing in 2023
For 2023, the governor of the Bank of Greece estimates that growth will slow, due to the prolongation of the energy crisis, as the war continues and keeps inflation at high levels.
In particular, rising energy costs and falling real disposable income will negatively impact businesses and households and increase income inequality.
At the same time, the cost of servicing loans for businesses and households will increase, due to the rise in interest rates by the ECB to control inflationary pressures.
According to the head of the domestic monetary authority, the consequent decline in business expectations and the deterioration of consumer confidence, combined with the change in monetary policy in a more restrictive direction, will lead to a slower rate of GDP growth in the coming year.
According to Mr. Stournaras, the effective use of European resources, within the EU budget for the period up to 2027, as well as the NextGenerationEU action, can be a counterweight to the pressures the economy will face.
Interest rate hikes and banksWith reference to the interest rate increases and the liquidity restriction attempted by the ECB, he will point out that a dilemma is emerging regarding the extent of the upward adjustment of borrowing costs, which will inevitably have negative effects on economic growth and the stabilization of inflation in the medium term horizon.
In relation to the banking sector, Mr. Stournaras will note that its profitability remains lower than desired, relying at this stage to a high degree on extraordinary sources of income.
The increase in interest rates may lead to an improvement in net interest income, however, according to the central banker, the deterioration of the financing conditions of credit institutions is a problem.
In addition, it is expected to underline that the creation of a new generation of red loans is likely, which will lead to an increase in the cost of credit risk, negatively affecting the results of the four systemic groups.
Latest News
New Athens Metro Line Hopes to Alleviate Heavy City Traffic
The massive project is expected to be completed in 2029
National Intelligence Agency DG to Accompany Greek PM to Ankara
Prime Minister Mitsotakis also gave an interview to Turkish newspaper Milliyet regarding his upcoming visit
Draft Bill Eyes Detection of Uninsured, Poorly-Maintained Vehicles in Greece
According to reports, at least half a million vehicles in Greece are uninsured, while the number of those without inspections is unknown
AIA: Passenger Traffic Up by 16.3% in April
Passenger traffic at the Athens International Airport (AIA) amounted to 2.49 million during April 2024
Fitch Solutions: Greece Set to Welcome 40 Million Tourists Annually by 2028
However, Fitch Solutions highlights concerns about overtourism, cautioning that it could strain Greece's capacity to deliver quality services, potentially leading to neglect of popular destinations
ELSTAT: Q1 Exports Down 11% – Trade Deficit Up 8.7%
Amid international uncertainty and armed conflicts in Gaza and Ukraine in 2023, Greek exports continued to decline, ending the year with an 8.5% drop
The Worst European Cities for Pickpocketing – Where is Athens?
The data was presented by London-based travel insurance company Quotezone
Greek Buyers Drive Vacation Home Market Resurgence
George Gavriilidis, CEO of the real estate consultancy Elxis highlights that Greek buyers are increasingly drawn to emerging locales.
INSETE: Air Data Tracker Sees Bookings up 8.4%
Of the 27,025,200 seats booked from March to October 2024, 80% have been confirmed
Titan Group Announces IPO For Its North American Subsidiary
Titan Group subsidiary Titan American will be listed in a New York stock exchange, with the details pending