The Governor of Greece's Central Bank, Yiannis Stournaras, announced on Friday that the country's economy is expected to grow by 2.2% in 2023. However,
Stournaras also urged the country to continue with the path of reform and fiscal prudence as Greece enters a period of increased political uncertainty due to elections.
Greece is scheduled to hold a general election on May 21, several weeks before the current conservative government's term ends. Yet, the vote is unlikely to produce a clear winner, setting the stage for a period of protracted political manoeuvring and a potential runoff vote.
Stournaras highlighted the need for Athens to maintain credible policies to shield its economy from various risks, including the impact of the energy crisis and a prolonged electoral period. "The biggest risk for Greece's economic prospects in a period of successive crises and increased uncertainty, would be a loss of credibility on the economic policy implemented, which was so hard to regain, and a return to the bad practices of the past," he said.
Greece's emergence from international bailouts in 2018 marked the end of nearly a decade of economic turmoil that forced the country to seek financial aid from its European peers and the International Monetary Fund in exchange for austerity measures to stay afloat.
Stournaras' latest growth projection upwardly revises an earlier central bank estimate for economic expansion of 1.5% this year from 5.9% in 2022, reflecting Greece's fiscal progress. The governor stated that headline inflation would remain at high levels but was expected to ease to 4.4%, and he confirmed a government projection for a primary surplus of 0.7% this year.
In the medium term, Greece needs to be able to achieve sustainable primary surpluses of around 2% of gross domestic product, while maintaining fiscal credibility is essential for the aim of regaining investment grade and reducing the highest debt in the euro zone.
"Since 2023 is a year of national elections, to maintain the climate of confidence in the prospects of the Greek economy, prudence and responsibility is required from political forces that need to support the country's fiscal goals," Stournaras said. Photo by George E. Koronaios, Wikimedia commons.