The European Commission has revised its forecast for Greek growth in 2022 and 2023, considerably reducing its expectations, while the Finance Ministry appears to be shelving any plans for additional support measures, despite the positive budget figures to date.
In its spring estimates Brussels projected that the Greek economy will expand 3.5% this year, against a previous estimate for 4.9%, and by 3.1% in 2023 from the 3.5% anticipated in February. It also forecast that the average inflation rate this year will come to 6.3%.
In view of the reduced growth forecast, the Finance Ministry is freezing any expectations for any further interventions against the energy crisis’ effects, after the 3.2 billion euros announced recently. If the fiscal conditions allow for it, that might be reconsidered, according to a senior ministry official.
This approach is in spite of the January-April budget execution data released on Monday, which outperformed the targets: Tax revenues were €1.79 billion or 12.5% higher than the target, while the primary deficit amounted to just €811 million, against a projection for €2.45 billion.
“At the moment there is no fiscal space for any further measures,” the same ministry official noted on Monday, arguing that the improved results had already been taken into consideration before the planning of the measures announced earlier this month.
“Should there emerge any leeway, thanks to the decline of the natural gas rates below €100 per megawatt hour, or because of the improved course of tourism, we will revisit that. Developments regarding the increase of interest rates will also be examined. However, none of that will happen before June.” It is noted that June is when the Fuel Pass (i.e. the vehicle fuel handout) expires, while fuel costs keep soaring.
The government is under pressure due to the constant increases in prices, especially regarding energy, and is waiting for any European initiatives, including Italy’s proposal about a “cartel” of oil buyers.