Greek Economy: Resilience and Growth

In the post-pandemic era, the Greek economy presents two main characteristics: Resilience to endogenous and exogenous challenges and growth compared to the Eurozone average. Indeed, after gaining in 2021 what it had lost in 2020 amid the pandemic, in 2022 GDP growth was 5.9% while in 2023 an increase of 2.5% is expected, rates more than double the previous year. of the Eurozone. Despite inflation, especially in food, despite catastrophic fires and floods and despite the war in Ukraine, the Greek economy is holding up more than the economies of much stronger countries in Europe.

The resilience and growth of the Greek economy seems to be linked to a significant degree with tourism development. Tourism contributes about 20% of the primary GDP. However, the secondary consequences of tourism development are extremely important: investments in catering and hotel units and employment in many professions (engineers, skilled workers, craftsmen, laborers, lawyers, notaries, real estate companies, hotel professions, etc.). Thus, part of the increase in employment is due to tourism (unemployment from 17.5% in 2018 decreased to 10.9% in 2023).

Of course, tourism is a precarious economic activity and, therefore, the parallel development of manufacturing and the agri-food sector is necessary. The government’s effort is directed in this direction, in particular by encouraging investments mainly in the green economy with the assistance of the Recovery Fund (an amount corresponding to 6% of GDP has already been disbursed), but also by strengthening the confidence of international markets and therefore the increase of foreign investments in Greece, especially after the performance of the investment grade by major international rating agencies.

In addition, the good course of general inflation in the EU and Greece (Sept.23 – 1.6% excluding food 9%) seems to distance the increase in interest rates from the ECB, with positive effects on the growth dynamics of the Eurozone. If its major economies recover, then Greek exports to the Eurozone will increase again, as they have been decreasing in recent months with the risk of the current account deficit increasing again (currently around 8% of GDP)

These positive developments, thanks to successful economic policy, are obviously reflected in the performance of government revenues. Thus, without causing a deficit in the Budget, salaries and pensions of civil servants can be increased and at the same time a primary surplus can be created (this year 1.1% of GDP and 2.1% in 2024). At the same time, the percentage of Greece’s external debt in terms of GDP in current prices also decreases significantly (from 207% of GDP in 2020 to 166% of GDP in 2023).

Overall, the resilience and growth demonstrated by the Greek economy has results in the level of productivity, i.e. in the increase of product per worker, which allows for an increase in wages and is a key objective of the government, with special provision for vulnerable population groups. One hopes, that this very good picture of the Greek economy will not be overshadowed by the clouds of the war that has broken out in Israel.

Napoleon Maraveyas

Professor of European Political Economy, National and Kapodistrian University of Athens

Jean Monnet European Headquarters

Former Minister, FormerVice-Chancellor of EKPA