UBS, the Swiss-based investment bank has considerably raised its growth forecast for Greece’s gross domestic product (GDP) for 2022.
UBS raised its estimate to 5.7 per cent from 4 per cent based mainly, but not only, a dynamic recovery of the tourism sector post COVID-19 border closures.
Over 35 million tourists look to fuel a record-breaking revenue of €20 billion, or $AUD29 billion. This is more than better than the €18 billion, or close to $AUD26 billion reached in 2019, before the COVID-19 pandemic hit.
Because of much stronger growth this year, UBS has revised its 2023 estimate downward to 4 per cent from 4.7 per cent previously.
The first sign that growth would be higher than expected this year was a strong first quarter: GDP rose 2.3 per cent quarter-on-quarter and 7 per cent on an annual basis.
Then came tourism: UBS had estimated 2022 revenue at €15 billion, $AUD 21 billion, still a significant rebound from the lockdown-plagued 2021 (€10 billion or $AUD13 billion).
This was reportedly strengthened by a strong income in tax receipts in the second quarter, which rose 31 per cent compared to the same period last year. In the same quarter, tourism revenue rose 330 per cent on an annual basis.
The final issue was the recovery in business lending, enhanced by funds from the European Union’s Recovery and Resiliency Facility.
UBS notes that Greece still has challenges, such as the likely disruption of natural gas flows from Russia. And yet, natural gas imports account for only 9 per cent of Greece’s energy needs, which should make it easier to find substitute fuels and sources.
UBS also records that Greece has a floating liquefied natural gas (LNG) terminal, which is currently being supplied by imports from Qatar and the US.
A hand-break to growth according to UBS could be a rising inflation which in 2022 may go above 9 per cent, as wage hikes fail to compensate for the loss of purchasing power, even as higher growth creates more jobs.
Household finances are being buttressed up by substantial electricity and other subsidies and by higher savings. Since the end of 2019, households’ bank saving has risen by €20 billion, or $AUD29 billion, 10 per cent of GDP.
