Clouds are gathering over the Greek economy

An anti-Israel billboard with an image of Iranian missiles can be seen on a street in Tehran, Iran, on Friday [Reuters].

Storm clouds are gathering over the Greek economy at a time when, in addition to the domestic challenges that continue to cloud the outlook, such as demographics, climate change and the still large investment gap with Europe, the worsening external geopolitical tensions are also becoming a problem new scenario of uncertainty.

The already weak growth of Europe's major economies, on which Greece also relies for investment, exports and tourism, combined with the real threat of new upward pressure on inflation, poses an additional challenge. The government forecasts growth of 2% this year .9% even the expected revised forecasts (estimated at 2.5%) appear extremely ambitious.

“The external macroeconomic environment remains full of challenges, with increasing security uncertainties,” Spyridoula Tzima, assistant vice president of ratings agency DBRS Morningstar, noted to Kathimerini.

“There is a risk of an escalation in geopolitical tensions (Ukraine, Middle East), which would lead to a rise in commodity prices and upward pressure on prices. This would delay central banks’ decisions on rate cuts and could lead to additional need for fiscal measures,” Tzima notes.

Global challenges such as monetary tightening and geopolitical tensions, as well as domestic events (decline in agricultural activity due to severe flooding), have already impacted economic activity, notes Maddalena Martini, senior economist at Allianz. She tells Kathimerini that weak global demand will create new challenges for growth in Greece this year. “We expect GDP growth to reach 1%. “Greece is affected by a slowdown in the target markets of its main exports, at a time when the country is heavily dependent on the export of services such as tourism.”

Oxford Economics economist Paolo Grignani is somewhat more optimistic, estimating that growth in Greece will reach 1.7% this year. “Although weak growth in the Eurozone will certainly have a negative impact on the prospects of the Greek economy, we remain positive in this regard as Greek growth since 2019 has been driven to a significant extent by domestic demand – both consumption and demand Investments,” he explains.