Through a teleconference chaired by the Prime Minister, Kyriakos Mitsotakis met the Cabinet.
In detail, as stated in an announcement by the Deputy Minister despite the Prime Minister and government representative Giannis Oikonomou:
1. The Minister of Finance Mr. Christos Staikouras and the Deputy Minister of Finance Mr. Theodoros Skylakakis presented the situation and the prospects of the Greek economy, as well as the Preliminary Draft Budget of the General Government for 2022
Despite the fact that the 2022 Budget is being prepared - like the previous one - under the regime of uncertainty caused by the global health crisis, the first positive macroeconomic results have already been recorded, after the gradual recession of the direct economic effects of the pandemic crisis.
For this reason, the growth rate for 2021 is revised significantly upwards, from 3,6% projected in the MTEF 2022-2025, to 6,1%. This means that in relation to the 8,2% recession observed in 2020, the economy has already covered more than two thirds of the lost domestic product, in fact within a year, that in the first half of the year significant restrictive measures were still in force. exercise of economic activity.
In addition, the cumulative growth of the years 2021-2022 increases to 10,8%, 0,8% higher than the forecasts in the MTEF 2022-2025, signaling that in the year 2022, not only is expected to restore the level of domestic product of 2019, but this to increase further, by 1,7%. A characteristic and structural element of the economic growth that is already in progress, is the significant reduction of the unemployment rate, from 16,8% in July 2020, to 14,2% in July 2021.
This result is obviously not only due to the lifting of restrictive measures, but to a large extent to the unprecedented amount of financial support for households and businesses, which exceeds € 42 billion in cash, and € 30 billion in budget, in 2020 -2022.
The multitude of interventions, which include more than 70 categories of measures, many of which were renewed and improved on a monthly basis, managed to support the country's economic activity, so that it is ready to make a growth leap in the post-coronavirus era.
The new era of strong and sustainable growth marks the shift to a more extroverted, competitive and green economic model, to a more efficient State, with less bureaucracy, digitally upgraded, drastically reduced informal economy, a growth-friendly tax system and a more resilient social protection network.
Greece, having new financial tools available, including the Recovery Fund and the NSRF 2021-2027, is ready for a transition to a new era that combines economic efficiency with social cohesion and justice.
For the Greek economy, 2022 is expected to be a year of return to normal conditions. In the fourth quarter of the year, it is expected that the total annual GDP losses will have been recovered. of 2020, with the level of real GDP at the end of 2022 to exceed the corresponding level of 2019 by 1,7%.
The Greek recovery plan and resilience is a key factor in boosting economic activity in 2022.
Within 2022, the implementation of the plan is expected to give the Greek economy an additional 2,9 percentage points of GDP. without leverage, helping to reduce the long-term investment gap and laying the groundwork for high growth in the medium term, through the contribution of reforms.
Another important factor in accelerating growth towards 2021 is the gradual return to normalcy from a health point of view, which in turn will allow the full normalization of market operation, drawing additional benefits from the "profits" of the pandemic period in conditions of digitization and extroversion of the economy.
The return to normalcy is expected to facilitate the smoothing of the fiscal figures, while at the international level it is predicted that it will support the further recovery of the tourism sector, with the receipts from abroad to increase compared to 2021 by 60%.
Still, a favorable factor for the formation of a high growth rate in 2022 is the beginning of the implementation of some permanent development measures in the logic of improving the investment environment and the income support of households, as planned before the pandemic. These measures include the reduction of the corporate income tax rate from 24% to 22%, the provision of incentives for mergers and collaborations of small and medium-sized enterprises, the introduction of tax incentives for the use of electronic transactions, the abolition of the parental benefit tax and donations for benefits and donations up to 800.000 euros, and the increase of the minimum wage to a level higher than 2021 by 2,0%.
In addition to the above measures, in September 2021 another package of measures was integrated into the political planning, in order to address the effects of the transient inflationary pressures recorded internationally in the current period, to eliminate the risk of labor market delays during the transition period after the pandemic and to avoid inequalities in access to the digital transition.
These include the increased discount on green economy / energy / digitization costs, the National Youth Action Plan, incentives for young people to enter the labor market ("first stamp"), the reduction of fees mobile subscribers (abolition for young people up to 29 years old) and the establishment of an energy transition fund to reduce impairments in electricity prices.
Based on all the above, the real GDP is expected to increase in 2022 by 4,5% compared to 2021, driven by the steady growth rate of private consumption (2,9% on an annual basis), the significant boost of investment by 23,4% and the further recovery of exports services by 21%, amid rising foreign tourism.
The increase in real private consumption in 2022 is expected to be based on the increase in employment by 2,7%, with 80,9% of new jobs being related to salaried employment, but also to the increase in the nominal average wage. The inflation rate is expected to be moderately positive in the whole of 2022 (0,8%).
The acceleration of the real investment rate in 2022 is based on the implementation of the projects of the Recovery and Sustainability Fund, with more than 88% of the total distribution of grants and loans for the year to be directed to investments, of which 41,6% to public investments with high multiplier effect. The volume of public consumption is expected to adjust more closely to pre-pandemic levels in 2022, decreasing by 2,8% on an annual basis, while the trade deficit in terms of volume is expected to worsen by 2,4% of GDP. on an annual basis. By the end of 2022, all components of domestic demand are projected to be above pre-pandemic levels.
photo ArthurHidden, Image license by freepik.com
