Greece’s growth rate will reach 2.2% in 2024 and 2.3% in 2025, the European Commission said on Wednesday in its spring forecasts. Inflation (harmonised) is estimated to fall to 2.1% next year while debt will further decline, it added.

“Following a very strong post pandemic recovery, in 2023, real GDP growth was still high at 2%. It remains well above Greece’s long-term growth potential and the euro area average. Economic activity was driven by private consumption, that benefited from rising real disposable incomes, by investment in construction, and by net exports, while inventories were a drag on growth.”

“With pent-up demand largely exhausted, private consumption is now mainly supported by rising real income and it is set to increase at a slightly lower rate in 2024. The projected gradual easing of financing conditions and the accelerated implementation of RRP-related projects are forecast to stimulate gross fixed capital formation, which is expected to pick up from 4.0% in 2023 to 6.7% in 2024. The gradual rebound in external demand is also expected to support export growth, compounded by higher export market shares following competitiveness gains. However, the accelerating growth in investment, which has a significant import content, is set to induce higher import demand. Thus, net exports are likely to be growth-neutral and the current account deficit is projected to narrow only moderately over the forecast horizon. Overall, GDP is expected to grow by 2.2% in 2024.”

In 2025, economic growth is projected at 2.3%. Investment is expected to gain further momentum, and become a key contributor to output growth, while household spending is likely to be further supported by a rise in real income.