Banking on investment leap

Draft budget for 2022 anticipates that some 26 billion euros will be invested in the economy

The government is expecting a 23.4% leap in investments next year, compared to 2021, driven by the “Greece 2.0” program, according to the state budget for 2022, whose first draft was tabled in Parliament yesterday.

Finance Ministry projections put investments at 26 billion euros next year, from €21.1 billion this year and €18.4 billion in 2019.

Half the 2022 leap is seen stemming from the expansion of public investments and the other half from the private sector, according to the Hellenic Fiscal Council, which notes, “This reflects the most ambitious macroeconomic target of the draft budget.”

At the same time the ministry makes no secret of its concerns about a series of risks and uncertainties: the course of the pandemic (with the variants and the vaccination rate), the possible extension of inflationary pressures, geopolitical tensions and migration flows in the broader region of the Eastern Mediterranean, as well as the ever more frequent onset of natural disasters. Other risks include problems in the implementation of the Greece 2.0 program and the emergence of permanent problems from the pandemic in the economy.

The fundamental figures of the draft budget provide for a primary deficit of 7.7% of gross domestic product this year (up by 0.5% of GDP from the latest midterm fiscal plan in July), and 0.9% of GDP in 2022 (against 0.6% previously). Minister Christos Staikouras spoke at yesterday’s cabinet meeting about achieving “realistic primary surpluses” as of 2023.

The deterioration of these figures compared to estimates three months earlier, despite the improvement in GDP projections, reflects the increase in expenditure due to the extended effect of the pandemic, and the measures announced last month in Thessaloniki.

The growth rate is now expected to reach 6.1% this year, up from the 5.9% the prime minister had estimated in Thessaloniki, thereby covering three quarters of the 2020 losses. For 2022 the forecast is for 4.5% growth, down from 6.2% previously.