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Greece on the road to economic recovery


How many tourists will there be in Greece this year? At the start of spring, the entire tourism sector, which weighs 20% of GDP, hopes to return to the level before the health crisis. The first signs are encouraging: in the specialized press, tour operators observe that Greece is once again the top destination for holidaymakers for this “spring-summer”.

Another favorable sign for this country shaken by a violent financial and economic crisis between 2009 and 2018 which caused it to lose 25% of its wealth: Athens announced this week the repayment of all of its debt to the IMF by the end of April. (i.e. a balance of 1.850 billion euros, editor’s note), two years ahead of schedule. Has the country, which received some 260 billion euros in loans during the crisis, finally pulled its head out of the water? “This early repayment is a good signal, analyzes Guillaume Derrien, economist at BNP Paribas. And it is also a sign that the Greek economy has recovered well from the Covid”he continues, stating that unemployment continues to decline, to 12.8% in February 2022.

Return of foreign investors

“The Greek authorities have managed in recent years to put 40 billion euros aside, despite the public aid to households and businesses distributed during the Covid. In particular, they have improved tax collection and conducted prudent budgetary policies”, confirms Christopher Dembik, at Saxo Bank. Large foreign investors have started to return, particularly in the agricultural and infrastructure sector. As for the rating agencies, they have all revised their outlook upwards in recent months.

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“The banking sector is still fragile but has improved a lot, and non-performing loans (at risk of not being repaid) have decreasedcontinues Guillaume Derrien. The country has been able to take advantage of low interest rates in Europe to reduce the weight of its debt. »

For Christopher Dembik, “Athens is rather well equipped to face the economic difficulties to come”. And difficulties, there is no shortage of them on the way to the convalescence of this country, whose wealth remains below its pre-crisis level. “It’s a bit like the myth of Sisyphussummarizes Christopher Dembik. Each time the results improve, a new shock comes to interfere”from welcoming migrants since 2015, to fires…

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Skyrocketing cost of living

At the end of February, several thousand people protested at the call of the unions in the Greek capital, against a surge in the cost of living. The consumer price index jumped 7.2% year on year in February 2022 according to Elsat, the Greek statistics institute. The Minister of Finance acknowledged on this occasion that “the new global environment is steeped in great uncertainty”risking eating away at household budgets.

And to promise “Help for the Most Vulnerable” and raising the minimum wage, currently at €650 per month. Greece comes just behind Bulgaria and Romania on the risk of social exclusion, with more than a quarter of its population (28.9%) at risk of poverty. “More than 44% of households say they have difficulty paying their rent or their mortgages”, while “16% do not have adequate heating”according to the Greek Anti-Poverty Network.

European funds

However, the year 2021 ended with promising prospects with growth above 8% and a forecast for 2022 at 5%. The war in Ukraine, the latest shock, can it weigh heavily on Athens? “Greece is in danger of suffering from the distrust that is beginning to arouse in Europe, points out Christopher Dembik. Our continent is indeed perceived, by non-European financiers, as the most exposed to the war in Ukraine, because of our strong dependence on Russian gas and oil. » The ten-year rate at which Greece borrows has fallen from 0.9% in September 2021 to 2.5% today (it had risen to 40% at the height of the crisis).

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For its part, the European Commission will undoubtedly reduce its growth forecast for 2022. “But Athens can count on the support of the ECB, which is reinvesting in the Greek bonds it holds, rather than disposing of them, explains Guillaume Derrien. It will also benefit from European funds and the EU recovery plan, ie 40 billion euros in all. Beyond the short-term headwinds, there are reasons to remain optimistic over the longer term. »


► The main figures of the Greek economy

The growth. – 8.2% in 2020; + 8.3% in 2021; + 5% in 2022 (forecast made before the war in Ukraine)

Public debt. 206.3% of GDP in 2020; 197% of GDP in 2021 and 189.6% of GDP in 2022.

The government deficit. – 6.9% of GDP in 2020 and – 6.3% of GDP in 2021.

Inflation. Before the start of the war in Ukraine, electricity prices had increased in January, over one year, by 56%, those of fuels by 21.6%, and those of natural gas by 156%, according to Elsat.

Sources: Eurostat, IMF, Insee, Greek government, Elsat.

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