After the decline in the growth rate of the Greek economy in 2023 to 2% compared to the 2.3% initially envisaged, according to the data recently announced by ELSTAT, the TTE now estimates that this year’s GDP will rise by 2.3%, compared to the initial forecast for 2.5%. However, TTE maintains its forecast for growth unchanged 2.5% in 2025 and 2.3% in 2026. The revised provisions of the Central Bank are included in the issue of the Note on the Greek Economy published today. The TTE insists that the risk of further slippage of the rate of economic growth is present (degressive risk according to the current terminology) due to a possible deterioration in the geopolitical crisis in Ukraine and the Middle East with the consequent effects on the global economic environment; (ii) a lower rate of absorption and use of the Structural Funds of the Recovery Fund and the EU; (iii) any delays in implementing reforms which will brake the process of improving the productivity of the economy and the competitiveness of businesses. On the other hand, positive surprises on the tourism front and the impact of the upgrading of the economy will contribute positively to the growth rates of the economy. For developments in the financial sector, TTE points out that the results communications for 2023 of the four systemic banks showed an increase in net revenue interest rates, which, however, was overcompensated by the decrease in net revenues from commercial transactions and other revenues, resulting in a moderate decrease in net profits. According to the results announced, the index of the four banks’ red NPE loans is, on average, around 4%. At the same time, the yields of high collateral bonds issued by Greek banks decreased over the period considered. Regression of deposits TTE finds that since the fourth quarter of 2021, the increase in private sector deposits has slowed overall. Undertakings, as indicated in the analysis, use their liquidity reserves in view of higher interest rates. Household deposits have been negatively affected by increased consumer spending, high inflation and, more recently, the high opportunity cost of bank deposits. The increase in bank loans to businesses has slowed since the last quarter of 2022 amid higher interest rates and the weakening of economic growth. Banking loans to households continue to be reduced due to the de-settlement of housing loans. Banking lending rates have recorded significant increases, particularly for business loans, following the tightening of the single monetary policy.
The Bank of Greece revised its growth forecast this year
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