The Greek economy is forecasted to expand at a faster pace in 2024, compared to 2023, well above the eurozone average, according to the annual report released on Monday by the Governor of the Bank of Greece (BOG), Yannis Stournaras.

Addressing BOG shareholders at the 91st Annual Regular General Meeting of the Bank of Greece, Yiannis Stournaras presented the results, prospects, and challenges facing the Greek economy.

Based on the most recent estimations by the Bank of Greece, economic activity is projected to increase by 2.3% in 2024, driven by sustained private consumption and investments as key growth drivers, while the contribution from the external sector is expected to be marginally negative.

Private consumption (+1.7%) will be bolstered by a rise in households’ real disposable income, attributed to increased income from dependent employment, continued employment recovery, and further easing of inflation pressures.

General inflation is expected to further decline in 2024 to 2.8%, as all its components show tendencies of deceleration, despite the uncertainty created by geopolitical developments.

The Bank of Greece estimates that in 2024, the primary surplus will increase to 2.1% of GDP attributed primarily to the projected increase in tax revenues and social security contributions due to the strong economic growth rate.

“In an environment of heightened global uncertainty, the upgrade of the Greek sovereign credit rating to investment grade status last year signals a restoration of confidence in the prospects of the Greek economy. The positive assessments of the Greek economy over the past few years, amidst multiple crises, demonstrate the credibility of the policies pursued, as well as the resilience of the economy to negative shocks”, the Governor’s annual report notes.

The report cautions stating: “However, the fact that it took thirteen years for the country to return to investment grade suggests that confidence and economic policy credibility are crucial factors that, once lost, are very difficult to recoup. Political stability, fiscal stability and financial stability are public goods to be valued and preserved, especially in Greece that just a few years ago exited from the worst economic crisis in its recent history.”

Public debt is projected to decrease further to 152.3% of GDP in 2024, at a slower pace than in the previous three years, as declining inflation is expected to offset both the acceleration in real GDP and the dampening effect of the widening primary surplus. In addition, public debt is projected to decline in nominal terms for the first time since 2019.