Greece outperforms IMF goals – fears over negative GDP remain for 2023

Christine Lagarde, president of the European Central Bank, right, and Greek Finance Minister Christos Staikouras at the start of an Eurogroup meeting in Luxembourg, during the first week of October. Photo: AAP via EPA/Julien Wearnand

12 October 2022 5:40pm

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The International Monetary Fund (IMF) announced on Tuesday that Greece, according to the latest data, is projected to keep its gross domestic product in positive territory next year, although not as high as the Greek government expects. This comes at the same time over a third of the global economy is expected to fall into recession this year or in 2023.

“The worst is yet to come and, for many, 2023 will feel like a recession,” the IMF warned in its study, while it predicted that Germany and Italy are moving into “negative territory”.

For Greece, the Fund’s forecast is that the GDP will grow by 5.2 per cent this year, against the Greek government’s forecast (in last week’s draft budget) of 5.3 per cent.

The IMF has in fact predicted in June that Greece’s GDP would be 3.5 per cent as mentioned in the Article IV report.

Greece’s tourism influx this year has significantly improved the data, however, in the fourth quarter IMF estimates that growth will be limited to 0.7 per cent on an annual basis.

For 2023 its forecast for Greece drops to 1.8 per cent, compared to a government estimate of 2.1 per cent and its own previous forecast of 2.6 per cent.

In the last quarter of 2023, the Fund estimates that the pace will have accelerated to 7.5 per cent.

That means it will arrive at the average of 1.8 per cent in 2023, the first quarters of the year will be on the brink of stagnation, if not with a negative sign at some point.

Keeping GDP in positive territory is the Greek government’s big challenge for 2023, Kathimerini reported, which is also an election year.

Greece plans to rely on the Recovery Fund and the NSRF (National Strategic Reference Framework), with the draft budget providing for a 16 per cent increase in investments.

So far, all official estimates see Greek GDP in positive territory, although the head of the European Stability Mechanism’s mission to Greece, Paolo Fioretti, hinted last month he did not rule out a slide into a mild recession. Sources indicate that the European Central Bank also sees growth and not a recession for 2023 in Greece, according to current data and world events.