OECD forecasts growth of 6.7% this year and 1.6% in 2023 for Greek economy

The forecasts for Greece are made in a context of a general slowdown in the growth of the global economy to 2.2% in 2023 from 3.1% this year and of the Eurozone economy to 0.5% from 3.3%, respectively.

Unemployment in Greece is predicted to fall to 11.8% next year from 12.6% this year and 14.7% in 2021, while for 2024 it is predicted to fall further to 11.3%.

For inflation the OECD predicts it will decrease in 2023 to 4.3% and further to 2.3% in 2023 from 9.7% this year, estimating that energy prices will decrease.

If energy prices remain high beyond mid-2023 or are higher than projected, this will weaken consumption and production and put a lot of pressure on public finances, the report said.

The OECD notes that Greece has labor shortages, among the largest among EU countries, particularly in sectors that are recovering strongly. "Inflation is gaining a broader base as increased labor shortages contribute to wage pressures," it says.

It considers it appropriate to shift the wage adjustment mechanism from the administrative determination of the minimum wage to sectoral collective bargaining that reflects the conditions in the various sectors and labor productivity, in order to support real incomes and at the same time mitigate inflationary pressures.

As for public finances, the OECD projects a reduction in the overall general government deficit to 2.5% of GDP in 2023 and 1.5% in 2024 from 4.3% this year.

The fiscal measures for 2023 will continue to support the economy, with their cost amounting to 1.6% of GDP compared to 1.9% this year.

The report points out that a slower fiscal adjustment risks delaying the upgrade of Greece's credit rating to investment grade.

It recommends an end to horizontal support measures for measures to limit energy costs and a shift to income support for vulnerable households as well as greater support for improving the energy efficiency of buildings.

For public debt, it is predicted that its de-escalation will continue, falling to 170.7% of GDP in 2023 from 175.4% estimated this year.

Instead of subsidizing mortgage interest rates, the OECD suggests allocating the relevant resources to expand programs that support access to higher-quality housing, with renovations to improve their energy efficiency.