The rate of change of the general consumer index (GCP) was set at 3.5% in 2023
Annually development, of the order of 2.4% in real terms, IOBE estimates, boosted by the strengthening of investments and household consumption resistant to inflationary pressures. The unemployment rate for 2024, according to IOBE estimates, is expected to be around 10.5%.
The rate of change in the general consumer index (CPI) was set at 3.5% in 2023, up from 9.6% a year earlier. The strengthening of prices is mainly due to the positive effect of domestic demand. IOBE estimates that prices will remain on a milder upward trajectory throughout this year, in the region of 2.8%, mainly due to the resilience of consumer demand.
In more detail during the presentation of his Report IOVE for the Greek economy, the general director of IOBE, Professor Nikos Vettas, emphasized that the domestic economy is progressing on a stable basis, in the midst of mixed influences from abroad.
Among other things, in relation to developments in the domestic and international environment, he noted:
•The positive domestic trends include the gradual convergence of real GDP with the European average, the reduction of unemployment, as well as the gradual but slow filling of the investment gap. At the sectoral level, the dynamics in tourism and real estate stands out, while foreign direct investments registered a significant recovery.
•Furthermore, the investment confidence of the international investment community towards the country is strengthened, as a result of which the differential cost of public and private sector financing is reduced.
• A strong rise in productive investments is emerging as a condition for strengthening growth in the short term. Long-term, sustainable high growth rates will depend on changing the structural characteristics of the economy.
• In the international environment mixed trends are presented. On the one hand, the investment climate remains strong and it is positive that there is a “soft landing” of the global economy. On the other hand, significant challenges remain, such as high inflation and high interest rates, unabated geopolitical tensions, growing bipolar tendencies and the general relative lag in dynamics of the European economy.
In relation to the prospects for the domestic economy, Mr. Vettas emphasized that the bet of changing the production model remains critical and noted, among other things:
•A number of external challenges directly affect the prospects of the Greek economy, such as the slowdown in the growth of our trading partners, the high cost of money for a longer duration, the risks in the international capital markets, the rearrangement of the balances in world trade and the goals for green transition.
•Additionally, chronic internal challenges and imbalances need to be addressed in order to achieve the shift of the production model. For example, (a) in the labor market there is a high structural unemployment and skills mismatch between supply and demand, (b) in product and service markets it is crucial to strengthen competition and remove barriers to the entry of new businesses, (c) it is considered appropriate to remove disincentives for activities in the formal economy versus the informal, (d) it is necessary to strengthen the sectoral diversification of the economy with manufacturing as a complementary driving force in tourism and construction, (e) there is a need to improve the efficiency of the public sector, with an emphasis on health systems and education.
• In general, it is necessary to strengthen extroversion and investments as drivers of long-term economic growth. In this context, a short-term opportunity is the timely and effective use of the resources of the Recovery and Resilience Fund
