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Economy

Greece’s Growth Seen Passing 5%; But State Coffers Said Low

September 10, 2022

ATHENS – What’s on a course to be another record tourism year – perhaps bringing in more than 20 billion euros ($20.11 billion) will help propel growth past 5 percent, not enough to cut a 24 percent Value Added Tax (VAT) on food.

The New Democracy government, dealing with record inflation, is pumping state aid into helping households pay up to 94 percent of their doubled electric bills during an energy crisis spiking after Russia’s invasion of Ukraine.

Rating agency analysts and Greek economists made the prediction that’s above the 4 percent earlier estimated but the energy aid is depleting state funds although a 39-billion euro ($39.21 billion) reserve is being kept.

The growth is seen cutting Greece’s debt below 170 percent, a level that earlier had been seen as unsustainable despite three international bailouts of 326 billion euros ($327.74 billion) that expired in 2018.

The economists said while tourism has been a saving grace during the waning COVID-19 pandemic that the big boost of the first half of 2022 will be hard to maintain because of energy woes during the winter.

The state statistics agency recorded growth of 7.7% on an annual basis in the second quarter, down slightly from 8 percent in the first quarter, said Kathimerini, the 5 percent estimate providing another buffer.

Finance Minister Christos Staikouras noted that “the performance recorded by the Greek economy in the first half of 2022, combined with the record course of investments and exports during the same period, but also the recent uptick in economic indicators and metrics such as industrial production, travel receipts and the use of electronic transactions, suggest that GDP growth this year will be above initial estimates.”

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