UniCredit reiterates its economic forecast for Greece, expecting a 1.3% growth in 2024 and a slightly higher expansion of 1.7% in 2025. The bank believes that any deficit from the previous year could be offset by a potential increase in investment, supported by funding from the Recovery and Resilience Facility (RRF) and Foreign Direct Investment (FDI).

UniCredit foresees a moderate uptick in GDP growth during the first half of 2024, followed by a period of stability in the latter half of the year. This projection is based on the understanding that certain factors that hindered growth in the latter part of the preceding year, such as flood-related agricultural losses, abrupt adjustments in housing investments, and postponed public projects, were temporary setbacks.

Domestic demand is poised to remain the key driver of growth, fueled by the country’s swift absorption of EU funds and its recent upgrade to investment-grade (IG) credit rating, which stimulated robust foreign inflows.

UniCredit anticipates that this influx of funds will help mitigate the effects of tighter financing conditions and potential declines in business profitability, thereby boosting investments in the upcoming quarters.

Furthermore, inflation is expected to continue its downward trajectory in the coming months, largely due to stabilized energy and food prices.

However, structural inflation may decline more slowly, influenced by ongoing high service and processed food costs, alongside the impact of wage increases. Additionally, a new minimum wage hike is scheduled for April, following the first increase in public sector wages in Jan. after 14-years.