A 2.5% achievement for 2024, but also points that should be taken into account mainly in terms of wage increases and the competitiveness of the Greek economy, highlights the House’s in its quarterly report. The Office of the Budget places the annual growth rate of the economy at 2.5% and 2.9% for inflation, however, pointing out that the progress of Greek growth will also depend on the rate of absorption of the investment resources of the Recovery Fund of EUR 3.6 billion planned for 2024, working alternative scenarios. Introducing the assumption that the real economy absorbs half of the above resources, the annual growth rate of GDP for 2024 is 2.7%. With the optimistic assumption of channelling the resources of the TAA over three-quarters of their total, the annual growth rate of GDP is 2.9%, at the level of the 2024 budget estimate. Finally, with full transfer of the resources of the TAA to the real economy, the annual growth rate of GDP is 3.2%. Therefore, speeding up the rate of investment and channelling resources of the TAA is a necessary condition for achieving growth of more than 2.5% and which is close to the forecasting target of the budget. Furthermore, according to the Office’s estimate, the consolidated General Government Primary Result in 2023 records a surplus of EUR 3,624 billion (equivalent to an improvement of EUR 4,150 billion compared to the corresponding 12 months of 2022, and significantly exceeds the latest estimate of primary surplus recorded in Budget 2024, amounting to EUR 2,555 billion. The ‘asteres’ However, in the field of inflation, although there has been a slowdown in the general index, the report points out that the core is more persistent, shaping at 3.3% for February 2024, and the same applies to the Eurozone, which makes it difficult for the ECB to relax monetary stability. Particularly persistent is the inflation of food that according to the Office’s analysis contributed 56% to the total annual inflation between January 2023 and January 2024, subtracting from the purchasing power of income mainly of the most vulnerable households. To further reduce inflation, the Office is ringing the alarm of the risk to wage levels. In the scenario of intense requirements for raising nominal wages to a significantly higher percentage than the sum of inflation and productivity, a counterproductive and self-powered wage and price growth spiral is triggered, eventually leading inflation to a higher level by one percentage point for 2024, at 3.9%. The report points out that with higher inflation than the main trading partners, the Greek economy will have losses in terms of international competitiveness, resulting in: (a) reduction in exports, (b) reduction in employment, real wages and private consumption, (c) reduction in investment. This scenario, according to the calculations, results in GDP losses of around EUR 2.4 billion – corresponding to 1.2% of GDP – over a period of three years. In addition, GDP losses entail public revenue losses. The Office considers it necessary to pay close attention to any excessive increases in nominal wages. In particular, increases should be proportionate to the potential of the economy in order not to undermine its competitiveness. It is stressed that the recent increase in the minimum wage by 6.4% is marginally within the potential of the economy, if it does not exceed them. It will depend on whether the economy achieves a strong growth rate within 2024.
Budget Office: At 2.5% growth in 2024 – “Camp” for wages, investments and competitiveness
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