Greece on the road to economic recovery

How many tourists will be in Greece this year? In early spring, the entire tourism sector, which makes up 20% of GDP, hopes to return to pre-health crisis levels. The first signs are encouraging: in the specialized press, tour operators note that Greece has again become a leader among vacationers this “spring-summer”.

In another welcome sign for the country, which was hit by a brutal financial and economic crisis between 2009 and 2018 that saw it lose 25% of its wealth, Athens this week announced it would pay off all of its debt to the IMF by the end of April. (i.e. the balance of 1.850 billion euros, ed.), two years ahead of schedule. Has the country, which received about 260 billion euros in loans during the crisis, finally pulled its head out of the water? “This early repayment is a good signal, analyzes Guillaume Derrien, economist at BNP Paribas. And it is also a sign that the Greek economy has recovered well from Covid.”he continues, stating that unemployment continues to decline to 12.8% in February 2022.

Return of foreign investors

“The Greek authorities have managed to allocate 40 billion euros in recent years, despite state aid to households and businesses distributed during Covid. In particular, they improved tax collection and pursued a balanced budget policy.”, confirms Christopher Dembik of Saxo Bank. Large foreign investors began to return, especially in the agricultural and infrastructure sectors. As for the rating agencies, in recent months they have all revised their forecast upwards.

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“The banking sector is still fragile but has improved significantly and non-performing loans (risk of default) have been reduced.continues Guillaume Derrien. The country has been able to take advantage of low interest rates in Europe to reduce the weight of its debt. »

For Christopher Dembik, “Athens is reasonably well prepared for the coming economic hardship.” And difficulties, they are not lacking on the road to recovery in this country, whose wealth remains below pre-crisis levels. “It’s a bit like the myth of Sisyphussummarizes Christopher Dembik. Every time the results improve, a new shock intervenes.”from receiving migrants since 2015 to the fires…

The skyrocketing cost of living

At the end of February, several thousand people protested at the call of trade unions in the Greek capital against a sharp increase in the cost of living. In February 2022, the consumer price index jumped 7.2% year-on-year, according to the Greek statistical institute Elsat. The Minister of Finance acknowledged on this occasion that “The new global environment is steeped in great uncertainty”risking ruining the family budget.

And promise “Helping the Most Vulnerable” and an increase in the minimum wage, which currently stands at €650 per month. Greece is just behind Bulgaria and Romania in terms of risk of social exclusion, with more than a quarter of its population (28.9%) at risk of falling below the poverty line. “More than 44% of households say they have difficulty paying rent or mortgages” till “16% do not have adequate heating”according to the Greek Anti-Poverty Network.

European funds

However, 2021 ended with a promising outlook, with growth above 8% and a 5% forecast for 2022. The war in Ukraine, the latest shock, can it put a lot of pressure on Athens? “Greece is in danger of suffering from the distrust that is beginning to awaken in Europe, points out Christopher Dembik. Our continent is indeed perceived by non-European financiers as being the most war-prone in Ukraine due to our heavy dependence on Russian gas and oil. » The 10-year rate at which Greece borrows has fallen from 0.9% in September 2021 to 2.5% today (it rose to 40% at the height of the crisis).

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For its part, the European Commission will no doubt lower its growth forecast for 2022. “But Athens can count on the support of the ECB, which is reinvesting in its Greek bonds, rather than getting rid of them. explains Guillaume Derrien. It will also benefit from European funds and the EU recovery plan, that is, a total of 40 billion euros. In addition to short-term headwinds, there are reasons to remain optimistic in the long term. »


► The main figures of the Greek economy

Growth. – 8.2% in 2020; +8.3% in 2021; +5% in 2022 (prediction made before the war in Ukraine)

State debt. 206.3% of GDP in 2020; 197% of GDP in 2021 and 189.6% of GDP in 2022.

State deficit. – 6.9% of GDP in 2020 and – 6.3% of GDP in 2021.

Inflation. According to Elsat, before the start of the war in Ukraine in January, prices for electricity increased by 56%, for fuel – by 21.6%, for natural gas – by 156%.

Sources: Eurostat, IMF, Insee, Greek government, Elsat.

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