By Panos F. Kakouris

 

 

Increasing investment during 2023 is the big gamble for the Greek economy, in order to maintain a positive growth rate, given the uncertainty surrounding the Eurozone's growth.

 

At the same time, the government's economic staff believes that since 2023 is the first year in which the Greek economy will operate outside the tight fiscal surveillance that began in 2010, it signals an upgrade of the country's economic prospects, acting as a lever to attract investment and bringing the country closer to regaining the investment grade.

 

Investment is expected to grow at a very high rate throughout the forecast period 2022-2025, supported by strong liquidity in the banking sector and the use of available European funds.

 

In particular, in the coming years Greece will receive around ¢ã40 billion from the EU's long-term budget 2021-2027 and around ¢ã30 billion from the Recovery and Resilience Facility (RRF) until 2026. These resources are expected to attract additional private capital, which will leverage and further increase investment spending.

 

Commitment to implementing absorption of the RRF resources is expected to bring an increase in its annual contribution to growth to 1.9 percentage points in 2023.

 

The above implementation is projected to be the main driver of investment in 2023, the volume of which is projected to be 15.5 percent higher compared to 2022, and the basic factor supporting labour market resilience that will contribute to a 0.1 percentage point reduction in unemployment in the labour force to 12.6 percent.

 

This slight improvement of 0.1 percentage point in the unemployment rate is due to both the decline in external demand and the increased operating costs of firms. However, total employment is projected to be resilient in 2023, rising by 0.2% or 9 thousand jobs.

 

 

At the same time, increased foreign direct and indirect investment is expected to be attracted, continuing the positive trend of recent years.

 

In 2021 they amounted to ¢ã5.35 billion, while in 2022 they are estimated to have exceeded ¢ã6.4 billion, with the bar set higher for 2023.

 

In the context of these developments, the Ministry of Finance forecasts GDP growth of 1.8% in 2023, up from 5.6% in 2022.

 

 

The twists and turns brought to global trade by the Russia-Ukraine conflict have had an impact on Greece's trade deficit.

 

Despite an impressive rise in Greek exports in 2022, however, increased spending on fuel imports, as well as appreciations in other commodities (food, metals and other raw materials) led to a widening of the deficit last year.

 

The total value of exports in 2022 amounted to EUR 54,676.4 million, compared to EUR 39,997.0 million in 2021, an increase of 36.7%.

 

In fact, the value of Greek exports in 2023 is a historical record.

 

However, imports increased faster, by 42.2%, and their value reached 93,048.3 million euros, up from 65,457.3 million euros in 2021.

 

In this context, the trade deficit in 2022 amounted to 38,371.9 million euros, compared to 25,460.3 million euros in 2021, an increase of 50.7%.

 

However, Greek exporters, through the Panhellenic Exporters' Association, are optimistic for a further increase in their performance in 2023, subject to the proviso that something does not happen that will radically reverse the situation in the Greek and global economy.