Greek FinMin from NYC: GDP growth in 2022 to reach 5.6%, twice the EU average

Greek Finance Minister Christos Staikouras spoke on Friday at the 24th annual Capital Link investment forum in New York City, with this year’s event entitled “Sustaining Growth & Investment Momentum”.

The summit, focusing directly on the Greek economy and investment opportunities in the east Mediterranean country, again attracted US and international Investors, government and business leaders, investment bankers and representatives of the Greek government.

According to Staikouras, Greece expects GDP growth for 2022 to reach 5.6 percent, adding that “according to the forecasts of the European Commission, Greece is projected to grow at twice the European average in 2022, and three times the European average in 2023.”

Moreover, he added: “GDP quality improves, by strengthening the components of investments and exports. This year, it is estimated that Foreign Direct Investments will record a new historical performance.

According – once again – to the forecasts to the European Commission, Greece is ranked first in terms of investments’ increase for the period 2022-2024.

At the same time, Greek exports, as a percentage of GDP, are higher than those of Italy, Spain and France.

In addition, the export base is significantly diversified, registering an impressive increase in the exports of high-tech goods, which are now approaching the percentages of industrialized countries, such as Germany.

It is noted that, based on World Bank data, Greece had six categories of goods whose exports exceeded 1 percent of GDP in 2021, while before the outset of the Greek debt crisis it had only one, petroleum products.

“Labour market developments have been positive.

Unemployment continues its decline, being at its lowest level since 2010, employment increases by double the size of inactivity reduction, and the reduction in the unemployment rate among women and youth is more pronounced than the reduction in the headline unemployment rate.

“The banking sector has made marked progress. NPL ratio has been reduced from 44 percent of total loans at June 2019, to 10 percent three years later.

Over the same period, deposits have increased by 35 percent.

This progress in restoring banks’ balance sheets gradually allows credit institutions to increase finance to the real economy, as manifested by the accelerated credit growth rate in 2021 and 2022.

“Public finances have resumed their improving trajectory. We expect the primary deficit to shrink at 1.6 percent of GDP this year, from 5 percent of GDP last year.

According to the European Commission, this is the most pronounced fiscal consolidation among all EU member-states.

Moreover, we project primary surpluses for 2023 onwards.

This significant fiscal progress is based – among others – on a significant increase of revenues, mainly due to growth, as well as to the reduction of tax evasion, as a result of the reduction of taxes and social security contributions.

Indeed, according to the EU Report, published yesterday, Greece recorded the 4th largest VAT compliance gap reduction in the European Union in 2020, significantly limiting its revenue losses.

Moreover, the compliance gap is expected to decline even faster in 2021.

These findings prove that our government’s efforts to combat tax evasion, intensify controls and promote electronic transactions, combined with the significant reductions in taxes, are bearing fruits.

“Public debt is on record-level reduction path.

“Indeed, public debt to GDP ratio is projected to fall by 50 percentage points within a three-year period, the largest among all EU member-states since 2019, falling below 160 percent of GDP in 2023.

“Markets seem to note this improvement, as Greece, according to the ESDM, was one of the few – if not the only – euro area country where credit default swaps recorded a decline over the period June to November 2022.

“We have completed a number of important reforms to digitalize public administration, to reorganize the pension system, to simplify the framework for investment licensing, to provide a modern corporate governance regime, to establish tax incentives in order to boost research and innovation and to increase the size of firms.

Moreover, over the last three years, Greece has recorded a notable increase in institutional performance, including government effectiveness and perceived corruption, as measured by established international metrics.

“Overall, the Greek economy, as confirmed by the historical 1st Post-Program Surveillance Report, continues delivering.

“Thus, the release of the final tranche of policy-contingent debt measures marks the end of the regular Eurogroup discussions, as of June 2018.

“However, at the European level, high energy price pressures, the erosion of households’ purchasing power, a weaker external environment and tighter financing conditions are taking centre stage and heading into 2023.

“Moreover, public debt in Greece is sustainable and in a declining trajectory, but remains high.

“The country has exited the enhanced surveillance framework, but has not yet attained the investment grade status.

“Non-performing loans in banks’ portfolios fell significantly, but private debt remains one of the biggest problems for households and businesses.

“And we continue to navigate turbulent international geopolitical ‘waters’,” he added.