Deutsche Bank: Greece’s growth at 0.3% in 2023 – Inflation at 7.5%

Although the Greek economy presents a better picture compared to other European economies, it is nevertheless expected to be on the verge of recession in 2023, according to what is stated in a related report by Deutsche Bank. And indeed with persistently high inflation in 2023 as well

In particular, Greece will continue to present a better image compared to Europe, but this is enough to achieve a growth rate of 0.3% for the next year, according to the estimates of the German bank.

The bank estimates that our country will record an increase in GDP by 0.3% next year from 6.4% in 2022, while the recession in Europe has already begun. Deutsche Bank predicts a recovery in 2024, with growth rates of 1.4%. Greece will be one of the few countries in the eurozone to perform positively in the next very difficult year for the region, as the recession will be felt across the board (-0.6%), with Germany the worst performer with a recession – 1%, followed by Belgium with 0.6%, Austria and Finland with 0.5%, Italy and France with 0.4%, while zero growth is expected in Spain, Ireland (+1.5%) , the Netherlands (+0.5%), and Portugal (+0.1%) and are the only countries apart from Greece that will manage to avoid recession in 2023.

Inflation is a big “thorn”. For Greece, it is predicted that the consumer price index will reach 9.4% this year, and the German bank does not foresee a substantial de-escalation of inflation in 2023 and predicts that inflation will decrease -only- to the levels of 7.5% in 2023.

When will prices go down?

In essence, prices will fall in 2024, with inflation “falling” below the limit set by the European Central Bank, namely 1.5%. The fiscal deficit is expected to be 4.2% of GDP this year, 3% in 2023 and 2% in 2024. The current account deficit as a percentage of GDP is expected to be 8.5% this year, 7% in 2023 and 5 .5% in 2024.

However, Deutsche Bank notes that inflation is their main concern for the Eurozone, as it is not expected to reach a “ceiling” before the middle of 2023. Specifically, they estimate that inflation will be 8.4% in the Eurozone this year and will remain at high levels in 2023, at 7.1%, with de-escalation occurring in 2024, when inflation will decrease to 2.2%.

The danger of double dip

Risks to inflation are on the upside and market and public views on inflation remain overly favorable. The recession has begun, but it looks like it will be shallower this winter than the market previously feared. DB estimates that GDP in the Eurozone will fall overall from the fourth quarter of 2022 to the second quarter of 2023 by 1%, compared to previous forecasts of a 2% decline. The Eurozone economy will see a loss in GDP of 0.6% in 2023 from 1.2% previously and recovery is expected to come in 2024 with growth of 1%.

As the analysis puts it, the risk is a “double dip” recession due to significant headwinds in 2023 from a US recession, prolonged high energy costs and significant monetary tightening.