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IMF Says Greek Economy Will Grow by 6.5% This Year

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The International Monetary Fund announced that the Greek economy will grow by 6.5% in 2021. Credit: Simon D. McCourtie, CC BY-NC-ND 2.0

The International Monetary Fund (IMF) announced on Tuesday that the Greek economy is looking at a growth of 6.5% by the end of 2021.

The IMF detailed the country’s growth for 2021 in their global economic outlook report, where they also said that Greece’s economy would grow by 4.6% in 2022.

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The Fund predicts that the inflation rate will reach 1.3% by the end of the year and then drop down to 0.4% by 2022. They project that the unemployment rate will drop to 15.8% in 2021 and further down to 14.6% next year, both years down from 16.4% in 2020.

The IMF’s report comes a week after Greece’s own prediction and offers almost exactly the same figure. The country announced it would reach a growth of 6.1% in 2021, while the IMF bumped that number up to 6.4%.

Greece made their announcement in the provisions of the draft budget plan brought before Parliament on Monday.

Both the Greek government’s and the IMF’s data indicate that the Greek economy is expected to recover all losses suffered in 2020 in the fourth quarter of 2022.

Private consumption is projected to rise 2.9 percent this year, after falling by 5.2 percent in 2020 and to grow by 2.9 percent in 2022. Public consumption is expected to rise by 4.1 percent in 2021 and to fall by 2.8 percent in 2022, after rising by 2.7 percent in 2020, as the government will gradually lift support measures.

Growth in economy to be boosted by investments

Private investments, which fell 0.6 percent last year, are projected to jump 11.1 percent this year and to soar by 23.4 percent in 2022 helped by the inflow of funds from the Recovery Fund.

Exports of goods and services fell 21.7 percent in 2020, but are expected to rise 14 percent this year and 11.1 percent in 2022. Imports are projected to rise 6.6 percent this year and 8.9 percent in 2022, after falling by 6.8 percent in 2020. Unemployment is projected to fall to 16 percent this year and to 14.3 percent of the workforce in 2022, from 16.3 percent in 2020.

The draft budget plan noted that the National Recovery and Resilience Plan is expected to add 2.9 percentage points of GDP in 2022, while a gradual return to normalcy, based on the vaccination program, will offer additional economic benefits.

A return to normalcy is expected to facilitate the stabilization of fiscal data and support a further recovery of the tourism sector, with travel receipts expected to rise by 60 percent compared with 2021.

IMF offers the highest projection to date for Greece’s economic growth

The 6.5 percent growth forecast from the IMF is even higher than the projection by Greek PM Kyriakos Mitsotakis who stated in September that Greece’s economy will grow 5.9 percent during 2021.

The faster growth gave the Prime Minister the fiscal space to announce at the Thessaloniki International Fair a range of tax reductions and spending targeted at young people, small businesses, and the middle class.

Small businesses are encouraged to merge with tax breaks and new entrants in the job market will be subsidized. There was even something for 15- to 17-year-olds who will be vaccinated, in the form of 50 gigabytes of free data for their smartphones.

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