Bank of Greece Hails Economic Progress but Warns Stronger Growth Needed

Today the Bank of Greece submitted its Interim Report on Monetary Policy 2024 to the Speaker of the Greek Parliament.

The report gave a sunny depiction of Greek Economic performance.

Greek GDP grew by 2.3% from January to September 2024, driven by private consumption and investment. Employment rose for the most part. Inflation in Greece fell– hovering at an average of 3.0% in 2024, down from an average of 4.2% in 2023.

“Greece’s achievements in recent years indicate that the economy is on the right path,” stated the report. “However, the effort to recover from the 10-year debt crisis has yet to be completed. In real terms, both GDP and GDP per capita still fall short of pre-crisis levels, and their catching up with the European averages requires even stronger growth rates.”

The Bank of Greece reported that Greek banks achieved stronger credit ratings, higher profitability, and lower non-performing loans in the past year.

Loans to Greek businesses grew by 8.5% from January to October 2024, while household credit showed a less negative trend than in previous years.

Public debt has been reduced dramatically, but still remains high.

Projections

The Bank of Greece report projected GDP growth rising to 2.5% in 2025, with inflation falling and eventually aligning with European Central Bank targets of of 2%. They project that consumption, investment, and exports will drive growth.

Key risks to this growth include: “an aggravation of the geopolitical crisis in Ukraine and the Middle East and the implications for the global economic environment; increased trade protectionism worldwide; lower-than-expected absorption and utilization rates for RRF funds; a tightening labour market and possible wage pressures; slower-than-expected implementation of the necessary reforms; and possible natural disasters related to the climate crisis.”

Recommendations

Bank of Greece recommendations for the country to stay on track include more market reforms, strengthening export capacity, fronting a “digital transition”, and addressing a shrinking Greek workforce.

“Indicatively, demographic aging is expected to shrink the working age population. This calls for active labour market policies and education and training programs aimed to raise female and youth labour force participation,” stated the report. “Also, targeted policies are required to integrate immigrants into the labour force and attract foreign workers, so as to address labour shortages already observed in agriculture, tourism-related sectors and construction.”

Average Greeks Still Struggle

However there are several other data points that reveal the ways average Greeks are still struggling financially.

Recent data from Eurostat reveals that the economic climate for Greek citizens is more challenging than the government claims, with Greece being the only country to record a drop in employees’ daily wage in Q3 2024.

Additionally data from the Hellenic Statistical Authority indicate that although unemployment is decreasing in the Greek labor market, employment on the other hand, is not increasing at a similar pace.

Source: tovima.com