The European Bank for Reconstruction and Development (EBRD) raised its outlook for Greek economic growth in its latest report, the “Regional Economic Prospects, May 2024,” with short-term prospects remaining positive, as it estimates growth expected to accelerate to 2.3% in 2024 and 2.6% in 2025, up from 2% in 2023.

The report notes that following a strong post-Covid recovery in 2021 and 2022, GDP grew by just 2 percent in 2023, though still significantly outperforming the euro area average.

Both private and public consumption grew by close to 2 percent, gross fixed capital formation was up by 4 percent, and exports of goods and services rose by 3.7 percent, exceeding import growth (2.1 percent).

Tourist arrivals and receipts increased substantially in 2023, exceeding pre-Covid-19 levels. Confidence indicators also started moving in the right direction, while easing energy prices helped disinflation in 2023.

Headline annual inflation was 3.5 percent in the last quarter of 2023, having reached double-digit rates in 2022. In addition, Greece returned to investment grade credit rating during 2023 for three out of the four main Rating agencies.

The budget recorded a primary surplus of 1.9 percent of GDP in 2023 and the fiscal outlook is assessed to be in line with the provisions of the existing Stability and Growth Pact, reactivated as of 2024.

Economic confidence is steadily improving, with the Purchasing Managers Index (PMI) on an upward trend in the first quarter of 2024 (56.9 in March 2024, the highest level since February 2022), and the Economic Sentiment Indicator (ESI) reaching a 7-month high (108.4 in March 2024).

Both indicators remain at relatively high levels compared to the euro area. Good progress has been made in implementing projects funded by the Recovery and Resilience Facility (RRF), mitigating the downside risks coming from global and regional turbulence, as well as climate-related disasters.

The overall short-term outlook therefore remains positive, with growth expected to pick up to 2.3 percent in 2024 and 2.6 percent in 2025. Key downside risks remain, associated with possible delays in deploying Recovery and Resilience Facility (RRF) funds and weaknesses in key export markets and tourism source countries.