Greek economic growth seen lower in 2023 amid energy woes

Nov 21, 2022, 5:28 AM | Updated: 7:45 am

ATHENS, Greece (AP) — Greece’s economy is projected to grow by 1.8% next year, according to the country’s 2023 budget, slightly lower than the figures predicted last month as higher energy costs and inflation take a toll.

The final 2023 budget submitted to parliament on Monday is the first Greece has posted in 12 years that is free of the direct scrutiny, or “enhanced surveillance,” it had been under by European lenders during its financial crisis.

While next year’s economic growth figures are slightly lower than the 2.1% predicted last month, the budget sees somewhat improved growth this year, at 5.6%, compared to the 5.3% that had been predicted in the draft budget.

“The 2023 budget was prepared under conditions of great uncertainty regarding geopolitical developments on a global level,” the Finance Ministry said in an announcement, citing the energy crisis, inflation, increased health expenditures due to the COVID-19 pandemic and increased needs in defense spending.

Macroeconomic predictions faced increased risk “connected mainly to geopolitical challenges, the development of the war in Ukraine, the conditions of Europe’s supply with natural gas, energy and fuel prices, and European monetary policy,” it said.

The new risks come as Greece has been gradually recovering from a decadelong financial crisis that left it dependent on bailouts from other countries using the euro currency and the International Monetary Fund. In return for the rescue loans, creditors demanded deep public spending cuts, including to pensions and salaries.

The crisis wiped out a quarter of Greece’s economy, plunging it into a depression that saw poverty spiral and unemployment skyrocket to over 27%.

Now, inflation has taken a toll, with the rising cost of living spurring protests in Greece earlier in November and in other countries across Europe in recent months.

Greece’s budget projects harmonized inflation falling to 5% in 2023 from 9.7% this year. It also predicts a primary surplus — the annual balance before debt servicing costs — of 0.7% of gross domestic product next year, compared to a primary deficit of 1.6% this year.

It also expects Greece’s public debt falling to 159.3% of GDP next year from 168.9% at the end of 2022. Last year, the public debt stood at 194.5% of GDP. Unemployment was expected to stand at 12.7% at the end of the year.

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Greek economic growth seen lower in 2023 amid energy woes