Parliamentary Budget Office / Inflation up to 3.9% – “Sees” risks to growth as well

Inflation up to 3,9%i.e. much higher than the government’s estimate, predicts the Parliamentary Budget Office, according to his report, which he made public. At the same time, he “sees” risks for development.

According to one scenario, is activated one counterproductive and self-feeding spiral of wage increases and priceseventually driving him inflation in higher level against one percentage point for 2024at 3.9%.

With higher inflation than its main trading partners, the Greek economy will have losses in terms of international competitiveness, consistently

1. decrease in exports,
2. decrease in employment, real wages and private consumption,
3. decrease in investment.

The scenario this, according to the calculations comes to GDP losses by approx 2.4 billion euros -corresponding to 1.2% of GDP- to three-year horizon.

GDP losses entail loss of public revenue. Higher inflation also puts at risk the entrenchment of inflationary expectations in households and businesses and recommends potential risk of unhooking of these expectations and consequent deviation of inflation from the 2.0% target set by the ECB in the medium term for the entire Eurozone.

«Deviation of inflation by target will have negative consequences for the entire economy as mentioned above. The Office considers that great caution is needed in any excessive nominal wage increases,” the Office says, adding:

“The raises it should be analogous of possibilities her economy. so as not to undermine its competitiveness. The recent 6.4% increase in the minimum wage is marginally within the economy’s means, if not beyond them.”

According to exhibition This will depend from whether the economy succeed one strong growth rate inside 2024. Different is there an danger to hinder her de-escalation of inflation.