Greece sees economy growing at faster pace in 2024 -draft budget

Greece expects its economy to grow faster in 2024, bucking a slowdown in the broader euro zone economy on the back of strong projected tourist inflows, investment and pent-up demand, the government’s 2024 draft budget showed on Monday.

The government expects economic output to rise 3% next year following a 2.3% expansion this year, partly with the help of European Union recovery funds.

By contrast, the Commission has cut its euro zone growth forecast to 1.3% in 2024 from 1.6%. The ECB is even more pessimistic, forecasting GDP growth of 1.0% next year.

Greece has recently regained investment grade status for its debt. In 2024, it expects to achieve a primary budget surplus of 2.1% gross domestic product – which excludes funding debt-servicing costs and is crucial for debt sustainability.

“It is the first budget in 13 years that has been drafted with the country having an investment grade,” Finance Minister Kostis Hatzidakis said in a press release.

Greece emerged in 2018 from a decade-long debt crisis that forced it to accept three international bailouts. Its strong economic performance is also reflected in higher than expected tax revenues.

It now says it will achieve its target for a primary surplus of 1.1% of GDP this year, even after additional spending of 1.3 billion euros ($1.37 billion) on disaster relief work following storm Daniel and on financial aid to support vulnerable households from high prices and energy costs.

“The main drivers are EU funding, the able liquidity in the banking system and the regaining of investment grade which makes the country more attractive to investors,” said Eurobank chief economist Tassos Anastasatos.

Greece expects to receive more than 55 billion euros from the European Union’s structural and recovery funds in the next six years. Investment is seen growing by about 12% in 2024.

The government expects the country’s public debt – the highest in the euro zone – to drop to 152.2% of GDP in 2024 from 159.3% of GDP this year, according to the draft budget submitted to parliament.

The annual inflation rate is forecast to drop to 2.4% by the end of 2024 from 4.0% this year. Unemployment is also seen declining to 10.6% next year from 11.2% in 2023.
Source: Reuters (Reporting by Lefteris Papadimas and Angeliki Koutantou; Editing by Alex Richardson and Hugh Lawson)