After the decline in the growth rate in 2023 to 2% against the 2.3% originally predicted, according to the data recently announced by the ELSTAT, the Central Bank now estimates that this year the country’s GDP will increase by 2.3%, against an initial forecast of 2.5%. However, the Bank of Greece maintains unchanged its forecast for growth of 2.5% in 2025 and 2.3% in 2026.
Her revised predictions Central Bank are included in the issue of the Note on the Greek Economy published today.
The BoE insists that the risk of a further slippage in the rate of economic growth exists (downside risk according to current terminology) due to a possible worsening of the geopolitical crisis in Ukraine and the Middle East with the consequent consequences for the global economic environment – ( ii) a lower than expected rate of absorption and use of the structural funds of the Recovery Fund and the EU- (iii) in possible delays in the implementation of the reforms, which will brake the process of improving the productivity of the economy and the competitiveness of businesses.
On the other hand, positive surprises on the tourism front as well as the effects of the upgrading of the economy, will contribute positively to the growth rates of the economy.
Regarding developments in the financial sector, the BoE points out that the results announcements for 2023 from the four systemic banks showed a strengthening of net interest income, which was, however, more than offset by a decrease in net trading and other income, resulting in lead to a modest reduction in net profits.
According to the announced results, the ratio of bad NPE loans of the four banks is, on average, at around 4%. At the same time, the yields of the highly secured bonds, issued by the Greek banks, decreased in the period under review.
Withdrawal of deposits
The BoE finds that since the fourth quarter of 2021, private sector deposit growth has slowed overall.
Businesses, as stated in the analysis, are using their liquidity reserves in the face of higher interest rates. Household deposits have been adversely affected by increased consumer spending, high inflation and, more recently, the high opportunity cost of bank deposits.
The growth of bank loans to businesses has slowed since the last quarter of 2022 amid higher interest rates and weakening economic growth. Bank loans to households continue to decline due to mortgage deleveraging.
Bank lending rates have seen significant increases, especially for business loans, following the tightening of single monetary policy.
Source: RES-MPE
#Bank #Greece #Revises #growth
