13th evaluation: Positive conclusion – Alarm over uncertainty for inflation

The Commission emphasizes the positive prospects of the economy in its report on the conclusion of the 13th evaluation, while it sees the rise in energy prices as a source of uncertainty. It emphasizes, among other things, that Greece has recovered quickly from the pandemic and the prospects remain strong, although they are subject to high uncertainty. Currently, the economy is expected to record GDP growth of 8.5% in 2021, due to domestic demand and the better-than-expected tourist season.

The return to pre-pandemic levels of economic activity had already been achieved in the third quarter of 2021. The outlook for 2022 remains strong, supported by fiscal and monetary policy and the strong impetus from the Recovery and Sustainability Plan. However, the spread of the new Omicron variant is likely to weigh on growth in the last quarter of 2021, but this impact is expected to weaken significantly in the first quarter of 2022.

“Energy” uncertainty

Recent price developments in the global energy market, and in particular in the price of electricity, have led to rising consumer prices and are an additional source of uncertainty for the economy as a whole. While most of the emergency support measures were phased out in 2021, as planned, the government responded quickly to the outbreak of the new coronavirus variant and to higher-than-expected inflation with new targeted support.

The general government deficit is expected to decrease significantly in 2022 compared to the previous year. According to the report, the data foretell positive news for the fiscal result of 2021. It is recalled that the Commission’s autumn forecast forecast a primary deficit of 7.6% of GDP for 2021 and 1.2% of GDP for 2022 and 1.5 % in 2023.

Labor market developments remain favorable and unemployment, which stood at 14.1% in the third quarter of 2021 (from 17.2% in the third quarter of 2020), is set to fall further in 2022. The poverty risk was set at 17.7% in 2020, from 17.9% in 2019.

Public debts and outstanding pensions

In its assessment, the Commission notes that the authorities have made progress in clearing general government arrears to the private sector.

The stock of arrears of pensions has been reduced according to what was foreseen in the action plan approved in autumn 2021 and the authorities have confirmed that it will be fully cleared by June 2022.

After several months of stagnation, outstanding pensions have dropped significantly due to government measures to get the clearing of pensions back on track. The report notes, however, that while the number of outstanding pensions currently remains slightly above the target set in March 2021, the authorities expect that it will be cleared by February 2022. Implementation of the Court of Auditors’ recommendations and the simplification of budgetary procedures has proceeded as planned,