House Budget Office: Faster growth 2.3% this year – Notable is the recovery of Greek processing

Faster growth than the forecast of the Financial Plan 2025 – 2028 estimates the office of Parliament that the Greek economy will succeed this year. In its quarterly report, the Bureau for the Budget of the Parliament, predicts that the rate of growth in 2024 will be 2.3%, when the Medium-term report submitted yesterday (7.10.2024) to the Commission by the financial staff includes an estimate of 2.2%. The report welcomes the medium-term programme by saying it is guaranteed the country’s fiscal stability and credibility in the coming years. In relation to the forecast of the report, the updated assessment of the GCC for the annual growth rate of the economy for 2024 is 2.3%, with the forecast range ranging from 2.1% to 2.7% and this estimate being compatible with other updated forecasts recently published by the European Commission, the International Monetary Fund and the Bank of Greece. According to the GCC estimate, the primary surplus in the current year is set at 3.5% of GDP, with the continued improvement due to increased tax revenues thanks to increased employment while increasing wages and pensions, a strong increase in tourist revenues, which increased compared to the corresponding seven-month period of 2023 by 5.6%, and finally the overall increase in electronic transactions, as a result of the implementation of measures including the interconnection between cash machine companies with POS, and the expansion of the mandatory acceptance of payments with plastic money. Positive prospects and 2025, which factors will contribute The report points out that the prospects of the Greek economy are positive for both 2024 and 2025. For 2025, it stands out the continued withdrawal of monetary tightening by the European Central Bank (ECB), but also the recent upgrades of the four Greek banks reflecting the significant improvement in the prospects of the Greek banking sector, combined with the parallel introduction of the fifth banking city, which is expected to improve business access to cheaper lending. It also notes the importance of the proposed Finance Ministry bill which introduces incentives for mergers and acquisitions of enterprises, creates conditions for achieving economies of scale that favour productivity, the most important factor for strong economic growth in the long term and also a factor for price restraint for consumers. Notable is the recovery of processing Special reference is made to the GCC in Greek processing as its contribution to the country’s GDP rate is in the second quarter of 2024 at 10.4%, significantly higher than the corresponding 8.6% in the second quarter of 2009. It is stressed that the productivity of labour in the manufacturing sector has returned and even exceeded its level before the triple crisis (economic, debt and banking) which hit our country in 2010. This is due to various causes and factors, such as the strong export nature of the industry, the absorption of significant investments from the TPA, expenditure on research and development combined with the fewer working hours. The external risks remain However, the report points out that external risks do not disappear as the external environment remains volatile. Elections in the US and the revival of geopolitical tensions increase uncertainty internationally and therefore also in the Greek economy. The normalisation of monetary policy towards relaxation is delayed in some areas due to uncertainty as to the fall in inflation, while it began later than expected in the US. Moreover, high inflation, particularly in services, complicates monetary policy, creating increased uncertainty about the normalisation of monetary policy after the prolonged period of monetary consolidation in recent years. At the same time, increasing geopolitical and commercial tensions further exacerbate uncertainty about the path of inflation. Elections in the US cause uncertainty over any changes in trade and industrial policy towards its trading partners, and the processing industry is characterised by negative signs. In the eurozone, despite generally good conditions in the labour market, processing in particular in Germany has problems. According to the GCC, the need to improve the EU’s competitiveness vis-à-vis the US and China, highlighted in the recent Dragi report, requires quick and decisive decisions on a strong framework for cooperation and investment in innovation, defence and energy autonomy from the EU’s major economies.