IMF sees Greek economy growing at slower pace due to Ukraine

By Lefteris Papadimas

ATHENS (Reuters) – Greece’s financial system is predicted to broaden 3.5% this 12 months on account of increased vitality costs and the Ukraine disaster, the Worldwide Financial Fund mentioned on Friday, decreasing a earlier 5.4% estimate made final summer time.

“Development is predicted to stay sturdy regardless of the hostile influence of the struggle in Ukraine and excessive inflation,” the fund mentioned in a press release after a employees go to to Greece.

It mentioned elevated threat aversion and weaker client confidence on account of increased vitality costs would possibly delay investments and dent tourism’s restoration.

Its new estimate is decrease than Greece’s personal forecast for 4.5% development this 12 months. Greece’s financial system grew 8.3% in 2021.

The IMF mentioned common inflation will rise to 4.5% in Greece this 12 months earlier than it settles at 1.9% over the medium time period. The nation’s annual client inflation surged to 7.2% in February, a 25-year excessive.

The IMF mission, which referred to as for a growth-friendly fiscal adjustment and persevering with structural reforms, mentioned the federal government ought to return to main surpluses subsequent 12 months and obtain a surplus of two% of GDP by 2027.

Greece’s public debt, at about 200% of GDP final 12 months, is predicted to say no and rollover dangers seem manageable over the medium time period, it mentioned.

“Although the general threat of sovereign stress is reasonable, appreciable uncertainty stays about Greece’s means to maintain excessive main surpluses and the long run path of rates of interest as soon as Greece begins to switch official financing with market funding,” the assertion mentioned.

(Reporting by Lefteris Papadimas; Enhancing by Mark Porter)