The Greek economy will grow by 2.0 pct this year and 2.4 pct in 2020, the European Bank for Reconstruction and Development (EBRD) said in its autumn economic forecasts report released on Tuesday.
EBRD said the economic recovery that began in 2017 continued in 2018 and the first half of 2019, although at a slightly slower pace than expected, with 1.9 per cent GDP growth in 2018, and 1.5 per cent growth year on year in the first half of 2019.
Exports of goods and services remain by far the key driver of growth, private consumption retains a positive impact on growth, and unemployment continues to decline, down to 17 per cent in August 2019. The general government primary surplus was 4.4 per cent of GDP in 2018, well above the 3.5 per cent target, and is on track to achieve this target in 2019. Capital controls have been fully lifted as of 1 September 2019.
These improved conditions have boosted market and investor confidence, reflected in a sharp decline in 2019 of bond yields, and could ultimately lead to an increase in business investment, with the economic sentiment indicator reaching a 12-year record high level of 108.4 in August 2019.
Looking ahead, the main drivers of growth in the short term will continue to be exports and private consumption. Investment is the key to a full economic recovery and is expected to rise as the health of the financial sector improves. Nonperforming exposures remain exceptionally high but should lower significantly over time, an expectation helped by the October 2019 approval by the European Commission of a new asset protection scheme.
Short-term growth is projected at 2.0 per cent in 2019 and 2.4 per cent in 2020. However, economic growth depends on many factors, including the magnitude and pace of the reduction in non-performing exposures, as well as the capacity of the government to implement reforms.