The Bank of Greece (BoG) expects a slowdown in the growth rate by one unit – from an estimate of 4.8% before the war to 3.8% – in its basic scenario for 2022, with inflation soaring to 5.2% compared to initial estimates of 4.1%.

In the unfavorable scenario, growth will be at 2.8%, with an inflation of 7%.

“Although the main driving force of growth for this year is domestic demand and tourism, there is considerable uncertainty: the negative impact of inflation on real disposable household income will limit the growth of private consumer spending. Increased production costs and lower consumption will negatively affect the profitability of companies and, together with general uncertainty, will lead to postponement or even cancellation of investment decisions. There is also uncertainty about the impact on tourism inflows, mainly from Europe and the US, due to the declining purchasing power of households in the countries of origin, but also due to the creation of a strong sense of insecurity”, said the BoG governor Giannis Stournaras, in the context of the 89th Annual Ordinary General Meeting of Shareholders, shortly before the presentation of the report on the Greek economy in 2021.

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He adding, however, that, “there are also countervailing forces that mitigate the negative effects of the war in Ukraine and maintain growth momentum. These are: the start of the investment projects of the National Plan, the rise of employment, the already accumulated savings and the continuous increase of exports. These forecasts are subject to a number of conditions related to the complete elimination of the risk of the pandemic, the significant reduction of geopolitical instability, the continued strengthening of international tourism, the recovery of the Eurozone, the acceleration of investment and the gradual easing of inflation”.