Eurobank: The value of the fixed capital of the Greek economy decreased by 40 billion euros in 2011-2023

By EUR 40 billion the value of its fixed assets has decreased over the last 12 years, according to Eurobank’s study summary on the importance of infrastructure for development and the factors affecting it. With the exception of investments in the institutional sectors of households (mainly housing) and financial undertakings, the reduction in the fixed capital of the Greek economy from 2011 to 2023 amounted to 40.2 billion euros at current prices, with 24.0% of them (9.6 billion euros) coming from the institutional sector of the general government. Considering that the share of the general government’s investment lion belongs to infrastructure projects, the above-mentioned fall in public capital mainly reflects the shrinking capital of infrastructure, which is a source of negative external economies. On the basis of a numerical exercise,: Firstly, public investment should exceed 3.3% of GDP per year, so that the general government’s capital will enter an upturn, and secondly, public investment should be magnified at an average annual rate of 4.4% so that in 10 years the losses of public capital have been recovered during the debt crisis. In addition, private investment in infrastructure should also be increased to recover the losses involved. A major challenge in the effort to strengthen infrastructure during the current period is the strong shortage of construction workers. The infrastructure sub-sector should compete with the other sub-sectors of construction to attract workers, at a time when many major infrastructure projects are under way throughout the Greek territory. In the construction of roads, railway lines and utilities, employment from 33.8 thousand people in 2009, was formed at 16.9 thousand people in 2020 (-16.9 thousand people). In addition, in the post-pandemic period, after the war in Ukraine and the ensuing energy crisis, construction costs in terms of materials have increased significantly. Although there are no detailed data on construction costs in infrastructure, using as an approach the cost index of building new buildings of ELSTAT, a cumulative aid is recorded in the fourth quarter 2023 compared to the fourth quarter of 2019 by 21.0% (25.9% in materials and 12.9% in labour fees).