The Bank of America (BofA) maintains a positive outlook on the Greek economy, reaffirming the estimations that it is on track to outperform the eurozone average over the next two years.
According to the assessment by the multinational investment bank, three factors contribute to its positive perspective on the Greek economy:
- Positive momentum for capital investments, following years of underinvestment and amid full absorption of EU funds.
- A more moderate transmission of monetary policy, given the specific country-by-country structure of the Recovery and Resilience Plan (RRP) and domestic debt.
- Fiscal prudence and commitment to structural reforms.
BofA projects growth of 1.1% in 2024 and 1.7% in 2025, compared to forecasts for eurozone growth at 0.4%/1.1%, respectively. However, its analysis remains below the market consensus estimates which put GDP growth for 2024/25, at 1.5% and 2.3%, respectively.
As BofA notes in its analysis, the Greek economy experienced stagnation in the 3rd quarter of 2023, following a steady growth momentum in the first half of 2023, which is primarily attributed to consumption and exports (amid a strong recovery in tourism). The bank projects a slight slump in private consumption over the next 3 quarters due to the delayed impact of ECB tightening, weak external conditions, and moderate fiscal tightening.
As the ECB begins to lower interest rates, lower inflation will allow for a rebound in real income, and the external environment will improve. Thus, BofA notes, that economic expansion should regain acceleration in the second half of 2024 (to an average quarterly rate of 0.4%) before converging to a mean rate of 0.5% quarterly in 2025.
