UniCredit: Greek Economy to Stand Out in Eurozone, Despite Modest Performance

UniCredit projects Greece will achieve its inflation target of 2% in 2024, aligning with the European Central Bank’s goal, compared to the 2.5% forecast for the Eurozone, in a report.

Despite its investments in Greece via Alpha Bank, however, the Italian banking group remains cautious about the Greek economy’s outlook for 2024. In contrast to analysts’ and institutions’ estimates, which project Greek growth above 2%, the Italian bank anticipates a mere 1.3% increase in GDP for 2024, down from 2.3% in the current year, with a slight improvement to 1.7% in 2025.

The Italian bank stressed that concerns may arise as the Consumer Price Index is expected to decline to 1.6% in Greece in 2025, considering that the Greek GDP heavily relies on consumption.

These projections, while higher than the meager +0.5 percent predicted for the Eurozone’s GDP in the coming year, are attributed to restrictive monetary policies, stricter fiscal stances, and the weakening resilience of the labor market.

ECB’s Policy Implications and Economic Risks

UniCredit emphasizes the critical role inflation will play in the Eurozone in the coming year, confirming that structural inflation can approach 2% by the end of 2024 and dip below that level in 2025.

UniCredit also predicts that reinvestments under the PEPP program (Pandemic Emergency Purchase Programme) will continue in full until the end of 2024.

For the Eurozone’s economic trajectory, UniCredit forecasts a 0.5 percent increase in GDP in 2024, the same rate as the current year. Research indicators suggest that GDP will either remain stagnant or experience moderate contraction in the fourth quarter of 2023.

Regarding potential challenges affecting the economy, UniCredit anticipates these difficulties to persist in 2024. The transmission of aggressive interest rate hikes by the ECB continues in a period where household savings have been largely depleted, fiscal policy tightens, and labor market resilience begins to wane.

Source: to vima.com