The Greek economy has recovered dynamically from the severe recession caused by the coronavirus pandemic, with production returning to pre-pandemic levels in 2021.
This finding is noted by the International Monetary Fund in its latest assessment under Article IV of its Statute, which was published today.
Specifically, the IMF estimates that a strong growth of 3.6% is expected for the Greek economy in 2022, despite the effects of the war in Ukraine.
At the same time, he estimates that the energy crisis will raise inflation to 6.1% this year.
The Greek economy recovered strongly from the severe recession caused by COVID-19, with production returning to pre-pandemic levels in 2021.
A strong fiscal response, monetary policy facilitations and precautionary policies with significant EU support have been key to driving the recovery.
Despite the difficult environment, reforms have taken place in several areas, such as digitization, privatization, improving the fiscal policy mix and improving bank balance sheets.
Greece completed the early repayment of all outstanding loans from the IMF in April, ending its post-financing evaluation.
Growth is expected to remain strong at 3.5% in 2022 despite the negative effects of the war in Ukraine.
High energy prices are expected to raise average inflation to 6.1% in 2022. Such a Growth and inflation are expected to slow in 2023, reaching 2.6% and 1.2%, respectively. respectively.
The executives of the Fund also emphasize the the need to continue prudent policies and the implementation of structural reforms which boost growth to ensure debt sustainability and promote inclusive and greener growth.
Besides, they agreed that fiscal policy should remain facilitative but well targeted in 2022, before returning to a gradual and growth-friendly consolidation, with sustainable primary surpluses thereafter.
In this context, recommended replacing general subsidies for high energy prices with targeted support for vulnerable groups.
In addition, they broadly agreed on the need for a careful assessment of the impact of the plans for permanent cuts in social security contributions and the abolition of the solidarity tax.
They stressed that the recent increase in health spending and public investment must be sustained, while there must be resistance to pressure to increase the pensions and salaries of civil servants.
The IMF executives recommended further strengthening of the Minimum Guaranteed Income system to be the basis for targeted support in severe shocks.