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Economy

During Country’s Recovery, Bank of Greece Tempers Growth Estimates

March 20, 2024

ATHENS – While Greece has rebounded from a 2010-18 economic and austerity crisis that saw banks needing to be bailed out – now raking in profits – The Bank of Greece is being more cautious in its estimate of continued growth.

The economy grew 5.9% in 2023 on the bank of record tourism that brought in more than €20 billion ($21.73 billion), and there was optimism for 2024 to be a good year, although not as robust.

The bank said it had lowered its forecast for this year’s growth to 2.3% from 2.5% and is fully aligned with the latest estimates of the European Commission, against the government’s rosier estimate of 2.9%.

Greeks have shown in surveys that their priority is the economy, especially over high food prices, and that other issues – even scandals – don’t matter as much as their wallets and pocketbooks, the New Democracy government pushing growth.

The bank’s downgrade was the second since December 2023 and in a report said that investments and private consumption will be the driving forces while expecting marginally negative contribution from abroad.

There was also concern about the effect of Russia’s continued invasion of Ukraine on a number of markets and in the Middle East, where Israel went into the Gaza Strip in a hunt for Hamas terrorists who killed 1200 Israelis in raids.

The bank also expects a lower-than-expected rate of absorption and use of the structural funds of the Recovery Fund and the European Union, and possible delays it feared would hamper productivity and business competitive events.

Another worry was whether 2024 would see extreme weather events such as the 2023 deadly wildfires and floods that wiped out some 25% of the agricultural heartland of Thessaly, parts of which are still underwater.

The bank said other keys were controlling inflation, accelerating investment – with the help of EU funds – potential labor market shortages, energy security, fiscal sustainability, managing bad loans, keeping primary surpluses, competitiveness and promoting innovation, education and knowledge capital.

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