Costs will also be high due to lagging investment, an increasingly aging population, and the costs caused by climate change
The OECD lowers expectations for the Greek economy, as the bar for the growth of the Greek economy “falls”, while the forecast for the level of inflation remains above the limit set by the ECB in 2025! The OECD predicts growth of 2% and 2.5% for Greece this year, according to its six-monthly report (Economic Outlook) which was made public. It is recalled that in the Stability Program submitted two days ago to the E.U. the Ministry of National Economy sees growth at 2.5% this year and 2.6% next year. The OECD emphasizes that the main challenges facing the Greek economy are boosting productivity and fiscal adjustment due to high debt.
Inflation will continue to decline, albeit at a slower pace, and is forecast to ease to 2.1% in the final quarter of 2025. Inflation eased to 3.4% in March 2024, despite food prices they play championships. The OECD keeps the limit lower for the primary surplus as well, estimating that this year it will be 1.8%, from the 2.1% included in the Stability program. The same is true of public debt forecasts, which are expected to decrease from 161% of GDP in 2023 to 151% by 2025, with the Ministry of National Economy and Finance having set the debt threshold for 2025 at 146 .3%.
The “thorn” of Thessaly
According to the report, real GDP growth stalled in the second half of 2023 as floods in September of that year temporarily disrupted transport links and particularly affected agricultural production. According to the OECD, employment growth has slowed, but the employment rate and labor shortages remain at historic highs. Annual wage growth accelerated to 5.5% in the fourth quarter of 2023, with the minimum wage rising 9.4% in April 2023 and 6.4% in April 2024.
Bell for deficit and demographics
Despite the positive data seen by the OECD, it is ringing the “bell” of danger for the budget deficit, with its further reduction being imperative due to the high rate of the country’s debt. According to the report, the costs are expected to be large also due to the lag in investment due to the ten-year crisis, due to the increasingly aging population and the costs caused by climate change. According to the OECD, a further boost should be given to productivity in order to create more fiscal space, but also to improve the standard of living of Greeks. To do so, the report states, entails further progress in removing obstacles to investment, notably by strengthening the effectiveness of the judicial system, but also shifting public spending to investment.
#OECD #Lowering #bar #economy #thorn #bells
2024-05-05 10:18:55
