A strong growth of over 2% is projected for the next few years up to 2022 within the Government’s Development Plan, while unemployment is projected to fall to 14% in 2022 and the average wage growth is expected to reach 2.9%. At the same time, through the Public Investment Programme and Banking Partnerships, such as the EIB, it is expected that “hot” money -i.e. 45-50 billions- will be injected into the Greek economy, with the overall impact for it reaching even 100 billion euros.
2.1% growth in 2021-2022
In the period 2018-2022, macroeconomic scenario projections show acceleration of the dynamic growth. For this year, strong growth in investment (+ 13.1%), a gradual increase in private consumption (+ 0.5%) and foreign demand boosting exports (+ 4.5%), supporting steady growth in manufacturing and tourism. In 2019, output growth will grow to 2.5% on an annual basis, thanks to the improvement of all components of domestic demand (private consumption: + 1.4%, public consumption: + 0.4%, investment + 10.5) as the economic climate improves and funding through capital markets is normalised after the programme will be completed in August 2018. In the medium term, real GDP growth is expected to be around 2.1% on average between 2020 and 2022, as private consumption (+ 1.2% on average) is supported (0.4% on an annual basis) and investment continues to grow (+ 7.6% on average), albeit at a slower pace.
It is also worth noting that in recent years there has been a significant improvement, and exports of goods and services amounted to 33% of GDP in 2017 from 19% in 2009. The Development Plan aims to overcome 50% before 2025.
Unemployment decrease by 7.4%
From 2018, the average wage will follow a gradually accelerated positive path, reaching a stable annual nominal growth rate of 2.9% in 2021-2022, after the first signs of recovery in 2017 (+ 0.1% yoy). In the short term, wage recovery will further strengthen domestic demand, also taking into account steady growth in employment (+ 1.8% on average in 2018-2019). At the end of the medium-term period, employment is expected to increase by 1.0% on an annual basis, with an average annual growth rate of 1.4% in the period 2018-2022, with the unemployment rate falling to 7.4 percentage points against the 21.4% in 2017.
“Hot” money up to 100 billion in the next 5 years
At the same time, within the Development Plan, it is estimated that over the next 5 years, 45-50 billion euros will flow into the economy from the RIP and the government’s co-operation with International Financial Institutions (e.g. EIB, World Bank etc). Moreover, based on the macroeconomic model of the Greek economy used by the Treasury, a multiplier of between 1.5 and 2.0 should be applied to the above amount in order to calculate the total impact of public investment over the next 5 years that may even reach 100 billions…. / IBNA