Greek economy to grow 7% this year, EBRD report says

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The European Bank for Reconstruction and Development says the Greek economy will grow by 7% in 2021. Credit: public domain

The Greek economy is expected to grow by 7% this year and 3.9% in 2022, according to the European Bank for Reconstruction and Development (EBRD) said in its latest regional economic outlook report, released on Thursday.

The forecast is higher than that of the International Monetary Fund which in October forecast a growth rate of 6.5%. The IMF report came a week after Greece’s own prediction and offered almost the exact same figure.

Greek economy accelerates with infrastructure projects

Specifically, the EBRD said the economic recovery will accelerate as the country promotes major infrastructure projects, but noted that a significant downside risk still remains, linked to the evolution of the pandemic. coronavirus disease and its impact on tourism and other services.

The Greek economy recovered strongly after contracting 9.0% in 2020. In the first quarter, the country’s GDP grew 4.5% on a quarterly basis and 3.4% in the second quarter.

The EBRD said fiscal policy remained focused on measures to deal with the crisis, with the budget deficit likely exceeding 7 percent of GDP for the second year in a row. However, the establishment of a Recovery Fund should make a significant contribution to stimulating economic growth.

The EBRD has raised its forecast for its regions for 2021 to 5.5%. Although this represents a 1.3 percentage point upward revision from its June forecast after a strong first half performance, the bank has warned of serious threats ahead.

High commodity and energy prices, tight labor markets, supply chain disruptions and currency depreciations in some EBRD economies started to drive inflation up even before the last peak in case of Covid-19 infection.

On average, inflation in EBRD regions has risen 3 percentage points above its end-2019 levels in September 2021. In response, a number of central banks in EBRD regions have raised their key interest rates. .

In some EBRD economies, tight labor markets added to inflationary pressures, with a strong rebound in job vacancies in low-skill occupations. In other economies, a significant slowdown in labor markets persists. Unemployment increased by 1.4 percentage points on average between February and August 2020, while labor force participation fell by half a percentage point on average.

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