Greece: Recovery, or Another Recession?

In this strategic analysis, Institute President Dimitri B. Papadimitriou, Senior Scholar Gennaro Zezza, and Research Associate Nikolaos Rodousakis discuss the medium-term prospects for the Greek economy in a time of increasing uncertainty--due to the geopolitical turbulence emanating from the Ukraine-Russian conflict, with its impact on the cost of energy, as well as the increase in international prices of some commodities. Growth projections for the current year are lower than those recorded in 2021, indicating the economy needs to perform much better if it is to continue on the growth path that began in the pre-pandemic period. Similarly, growth projections for 2023 and 2024 appear much weaker, denoting serious consequences may be in store. With increasing price levels and the euro depreciating, an economy like Greece's that is highly dependent on increasingly costly imports will become more fragile as the current account deficit widens. In the authors' view, the continuous recovery of the Greek economy rests with the government's ability to utilize the NGEU funds swiftly and efficiently for projects that will increase the country’s productive capacity.