A message regarding the need for vigilance, despite the economy's good performance, was sent by Bank of Greece Governor Yannis Stournaras on Monday, while presenting his annual report during the central bank's General Assembly.
"Despite the constant positive assessments of the Greek economy in recent years, the restoration of fiscal balance and the strengthening of fiscal awareness among policy makers, there is no room for complacency," he underlined.
Even though the benefits of the reforms were now evident in the economy, with measurable and indisputable results, there was still a long way to go for Greece's credit rating to converge with the average of the eurozone countries.
In this context, a prudent economic policy characterised by consistency, medium-term rational planning and measurable objectives was demanded, he said. The continuation of reforms was also an essential condition, he added, especially those relating to the functioning of institutions and strengthening the structural competitiveness of the economy.
"Greece has a historic opportunity to complete the transformation of its economy, converging with the European average," he said.
Regarding the forecasts for the course of the economy in 2024, the Bank estimates that Greece's growth rate will accelerate to 2.3%, well above the eurozone average. Private consumption and investment will continue to be key drivers of growth, while the contribution of the external sector will be marginally negative, as strong investment activity will significantly increase imports. The tourism sector shows positive prospects again this year, despite the international uncertainty.
The BoG estimated that in 2024 the conditions will be created for a reduction in domestic bank interest rates, as inflation will gradually decelerate and the ECB's key interest rates will begin to decrease.
Headline inflation was expected to decline further to 2.8% in 2024, as all individual components show deceleration trends, despite the climate of uncertainty created by geopolitical developments.
In terms of fiscal policy, the Bank forecast that the primary surplus will increase to 2.1% of GDP in 2024. This improvement was mainly explained by an expected increase in tax revenues and income from insurance contributions due to the strong economic growth rate.
Public debt is projected to further decelerate to 152.3% of GDP in 2024, at a slower pace than in the previous three years, as falling inflation is expected to offset both the acceleration in real GDP and the dampening effect of a larger primary surplus. In addition, public debt is forecast to decrease in nominal terms for the first time since 2019.