Bank of Greece: Economic Growth of 2.3% in 2024 and 2.5% in 2025

The real GDP growth rate of the Greek economy in 2023 is estimated at 2.0%, slightly accelerating to 2.3% in 2024 to 2.5% in 2025, before a slight downtick in 2026, according to Bank of Greece (BoG) data released on Friday.

Investments and private consumption are expected to be the key drivers of economic activity in the coming years.

Monetary policy will remain restrictive, the data says and public investments will positively contribute to growth thanks to the funds from the Recovery and Resilience Facility (RRF).

Economic growth in Greece is expected to be significantly higher than the eurozone average in the medium term, according to the BoG data.

Industrial production was up by 10.3% year-on-year in January 2024, primarily attributed to increased electricity supply (up 34% year-on-year) and manufacturing production (up 5.4% year-on-year).

General inflation based on the Harmonized Index of Consumer Prices (HICP) decreased to 3.1% in February 2024 from 3.2% in January, mainly due to lower annual rates in non-energy industrial goods and both processed and unprocessed food categories.

In the housing market, prices continued to rise in 2023 at an accelerated pace (13.4%) compared to an average annual increase of 11.9% in 2022.

Concerning the labor market, employment rose by 1.2% year-on-year in 2023, while the unemployment rate decreased to 10.5% in the fourth quarter of 2023.

In January 2024, the primary surplus of the general government was 0.9% of GDP, compared to a surplus of 1.5% of GDP in January 2023, mainly due to higher RRF receipts in January 2023.

Banking
In the banking sector, in January 2024, lending rates remained broadly stable for corporate loans (at 6.0%) but increased for housing loans to households (to 4.6%). Interest rates were moderated by Greece’s credit rating upgrade to investment grade.

Financial markets
Demand for the offering of shares of Piraeus Bank on the Athens Stock Exchange was strong, resulting in an oversubscription of 8 times the offered shares, with the price reaching €4 per share and proceeds of €1.35 billion.

Greek government bond yields decreased amid falling returns in the eurozone due to investors’ improved expectations for interest rate cuts from the second quarter of 2024 onwards. Yields on Greek corporate bonds remained generally stable.

Stock prices of Greek equities declined in recent trading days, mainly due to stocks of basic materials companies and banks.