Greek economic forecast: 4% growth during soaring inflation

ATHENS – Tourists are spending so much that the Greek economy is expected to grow by 4% during the lingering COVID-19 pandemic until 2022, but there are still no plans to cut value added tax (VAT) by 24 % on food.

Prime Minister Kyriakos Mitsotakis, with one eye on the 2023 election, will use his Sept. 10 appearance at the Thessaloniki International Fair (TIF) to make the right prediction, Kathimerini said, along with more to come.

Its chief economic adviser, Alex Patelis, told Bloomberg TV that growth will beat initial estimates thanks to better-than-expected tourism revenue figures that could net a record 20 billion euros ($20.07).

Current account data released by the Bank of Greece showed record receipts in June, although arrivals that month were up 89% in the same month of the record year of 2019, indicating a higher level of visitor spending.

Government officials are awaiting report from European Union statistical authority ELSTAT on gross domestic product (GDP) figures for the second quarter of the year, the newspaper said.

A complicating factor is the amount of state aid given to households to meet the costs of inflation which is the highest in 29 years and which is cutting budgets so deeply that subsidies are needed for bills. gasoline and electricity.

It is estimated that a growth rate of 4% would create a so-called “fiscal space” of around 2 billion euros, roughly what it costs the government to buy 18 French-made Rafale fighter jets for face Turkish provocations.

There is also the cost of purchasing up to 40 US-made F-35 fighter jets as well as upgrading the Hellenic Air Force’s F-16 fleet, as Mitsotakis continues to build an arsenal for the defense.

But inflation will have to be revised upwards, to 8.9%, according to the European Commission, against 5.6% estimated by the stability program designed by Greece and its EU creditors, offsetting the gains of receipts.

Patelis told Bloomberg that the government is trying to be cautious and hopes GDP growth could even exceed 4% as the goal is to try to achieve investment grade in the markets with the end of the lockdown. EU post-bailout surveillance.

“It’s very important to maintain our credibility,” Patelis said. “Any tax support measure must be measured, targeted and proportional,” the government says it could afford to cut food tax.