Agência para o Investimento e Comércio Externo de Portugal


Bank of Greece | Economic Analysis and Research, May 13, 2022.

Recent Economic Developments: an overview


Economic activity posted a strong recovery in 2021, underpinned by the reopening of the economy and the COVID-19-

related support measures. Real GDP increased sharply by 7.7% y-o-y in 2021:Q4 and by 8.3% in 2021 as a whole driven

by the strong growth rates of exports of goods and services, gross fixed capital formation and the rebound of private



Inflation accelerated in 2021:H2, mainly driven by increases in energy and food prices as well as by gradually rebounding

core inflation. The positive trend is being continued and intensified in 2022:H1 as the first four months of the year



Labour market developments are favourable with employment growth picking up and unemployment declining.


 The current account deficit remains high relative to its pre-pandemic levels due to rapidly increasing imports despite

the robust growth of goods exports and the ongoing recovery in travel receipts.


 The fiscal stance in 2020 was highly expansionary, supporting economic activity and employment, and turned to broadly

neutral in 2021. Looking forward, the fiscal stance is expected to be slightly contractionary. Nevertheless, increased

public investment due to NGEU will partly compensate for the effect of the withdrawal of Covid -19 related measures

on growth.


 The annual growth rate of bank credit to NFCs has decelerated since early 2021, but remains high compared to the prepandemic years. NFCs and households have accumulated bank deposits of around €34 bn since March 2020 mainly due

to liquidity support measures and the postponement of consumption and other spending.


Financial market developments played a pivotal role in supporting the recovery, by providing ample funding to the

state and to large Greek NFCs; in 2022, Greek bonds and stocks are affected by the tighter global financial conditions.


Looking forward, NGEU funding, pent-up demand and the rebound in tourism are expected to be the three main drivers

of economic growth. However, the implications of the Russian invasion of Ukraine pose an important adverse supply

side shock, which is expected to negatively affect output and further fuel inflation. A first assessment of the negative

impact of the Ukrainian crisis on the Greek economy points to a slowdown by 1 percentage point compared to the initial

forecast made before the war, with GDP growth projected to reach 3.8% in 2022 in a scenario with a quick resolution of

the conflict. A potential further escalation of the crisis poses notable unfavourable risks to the outlook for the economy.


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