{ "title": "Greece: Staff Concluding Statement of the 2023 Article IV Consultation Mission", "publication": "IMF News, November 14, 2023", "sourceUrl": "https://www.imf.org/en/news/articles/2023/11/14/greece-cs-2023", "canonical": "https://www.imf.org/en/news/articles/2023/11/14/greece-cs-2023", "overlayPath": "/en/news/articles/2023/11/14/greece-cs-2023/index.md", "summary": "Greece: Staff Concluding Statement of the 2023 Article IV Consultation Mission", "publishDate": "2023-11-14", "sections": [ { "heading": "Economic outlook — summary findings", "content": "- Real GDP expanded beyond its pre-pandemic trend level.\n- Public debt-to-GDP ratio has declined below its pre-pandemic level; debt financing risks contained in the medium term due to favorable debt structure.\n- Banking system resilient with improving balance sheets.\n- Macroeconomic challenges: significant monetary policy tightening, persistent core inflation, rising real estate prices.\n- Structural impediments: low household savings, still low level of investment, structural shift from climate change weighing on medium-term growth." }, { "heading": "Recovery, inflation, and near-term outlook", "content": "- Real GDP growth in 2023: continued to expand at a solid pace in the first half of 2023 by 2½ percent (seasonally adjusted annualized rate).\n- Private consumption supported by increasing real wages and gradual decline in pandemic-induced excess household savings.\n- Fixed investment growth robust, driven by ongoing Next Generation EU (NGEU)-funded investment.\n- High-frequency data: economic momentum remained robust in Q3 2023 despite natural disasters (heatwaves, wildfires, and floods).\n- Unemployment rate: declined to 10 percent in September (a decade low).\n- Inflation (October): headline 3.8 percent (y/y); core 3.6 percent (y/y) — decelerated due to normalizing energy prices and base effects but remain high amid tightening labor market.\n- Residential real estate prices: increased by more than 50 percent since the trough in 2017 but remain below pre-Global Financial Crisis levels.\n- Growth projections:\n - Real GDP projected to grow by 2.5 and 2.0 percent in 2023 and 2024, respectively.\n - Medium-term GDP growth forecast to moderate to about 1¼ percent.\n- Inflation projection: Headline inflation projected to reach 2 percent by end-2025 as pressures on core inflation dissipate only gradually." }, { "heading": "Structural reforms and medium-term growth drivers", "content": "- Progress cited in digital transformation and integration of government services.\n- Labor market reforms: modernization of labor legislation and public employment services facilitating labor market adjustment since the pandemic.\n- Enhanced competition authority actions increased market competition.\n- Potential growth: estimated to have turned positive in 2022 for the first time since the sovereign debt crisis.\n- Recommendations to boost supply-side performance:\n - Rationalize regulations to facilitate firm entry and exit and job transitions.\n - Sharpen digitalization focus to serve small- and medium-sized enterprises.\n - Scale up lifelong learning (digital and green skills) to reduce skill shortages.\n - Improve availability and affordability of childcare and reduce marginal income tax of second earners to raise female labor force participation.\n - Strengthen judicial reforms and out-of-court proceedings to accelerate debt resolution and reduce bank NPLs." }, { "heading": "Banking system and financial stability", "content": "- Asset quality improvement: NPL ratio declined below 5 percent in 2023Q2 in systemically important banks, supported by securitizations under the Hercules program.\n- Banks: higher net interest margins and strong rebound in profits bolstering capital adequacy.\n- Liquidity: sizable liquidity buffers maintained despite substantial repayments of ECB’s TLTRO.\n- Financial stability recommendations:\n - Strengthen monitoring and management of interest rate, liquidity and funding, and credit exposures, underpinned by a strong bank capital base.\n - Closely monitor and stress-test banks’ interest-rate risk, funding, and liquidity as TLTRO replacement with more expensive market funding may pose challenges.\n - Proactive credit risk management to maintain comfortable capital buffers; use temporarily elevated profits to build capital buffers and restore quality of capital.\n - Macroprudential toolkit: activate a positive neutral countercyclical capital buffer to guard against systemic shocks.\n - Borrower-based measures for mortgage loans—ceilings on loan-to-value ratio and caps on debt service-to-income ratio—to enhance household resilience." }, { "heading": "Fiscal stance and recommendations", "content": "- Fiscal consolidation aim: continue growth-friendly consolidation to strengthen public debt sustainability while supporting inclusive and green growth.\n- Fiscal numbers:\n - Primary surplus projected to increase to 2.1 percent of GDP in 2024, up from projected 1.1 percent in 2023.\n - Maintain a primary surplus of about 2 percent of GDP in the medium term to improve public debt sustainability and provide space for domestically financed public investment and critical social spending.\n- Policy guidance:\n - Contain spending pressures, especially in non-discretionary areas such as public sector wages and pensions, which are elevated in cross-country comparison.\n - Protect or expand critical social spending: targeted social transfers, healthcare, and education.\n - Strengthen social safety net (including a single portal for benefits).\n - Advance fiscal structural reforms: address tax evasion (including targeted reforms for the self-employed), promote digital transactions, rationalize tax incentives, and strengthen public investment management in view of planned large NRRP investments." }, { "heading": "Risks and scenarios", "content": "- Upside and downside risks to growth and inflation:\n - Downside: escalation of Russia’s war in Ukraine or conflict in the Middle East could disrupt trade and trigger renewed energy and food price pressures; higher-than-expected persistence in euro area inflation and higher-for-longer rates would weigh on demand; more frequent extreme climate events could disrupt tourism and activity.\n - Upside: acceleration of ambitious structural reforms and stronger-than-expected market reaction to investment grade upgrade could improve growth.\n - Inflation risk: could remain high from weather-related shocks and domestic pressures from recent and expected wage and pension increases." }, { "heading": "Climate and green transition", "content": "- Climate challenge: dominance of fossil fuels in energy necessitates strong implementation of renewables policy framework.\n- Recommendations for green transition:\n - Streamline licensing for new renewables investment and better integrate renewables into the electricity grid to accelerate progress and boost energy security.\n - Consider raising the carbon tax (including excise and feebates) in non-ETS sectors such as transport to incentivize rapid and efficient green transition as energy prices normalize.\n\nGreece: Staff Concluding Statement of the 2023 Article IV Consultation Mission — November 14, 2023.\n\n---\n\n\n References\n\n- Greece and the IMF\n- IMF Policy Advice -- A Factsheet\n- Mission Concluding Statements\n- PRESS CENTER\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2023/11/14/greece-cs-2023" } ], "bullets": [ "[Markdown version](/en/news/articles/2023/11/14/greece-cs-2023/index.md)", "[Structured JSON version](/en/news/articles/2023/11/14/greece-cs-2023/index.json)", "[Bundle manifest](/en/news/articles/2023/11/14/greece-cs-2023/bundle-manifest.json)", "Published: November 14, 2023", "Real GDP expanded beyond its pre-pandemic trend level.", "Public debt-to-GDP ratio has declined below its pre-pandemic level; debt financing risks contained in the medium term due to favorable debt structure.", "Banking system resilient with improving balance sheets.", "Macroeconomic challenges: significant monetary policy tightening, persistent core inflation, rising real estate prices.", "Structural impediments: low household savings, still low level of investment, structural shift from climate change weighing on medium-term growth.", "Real GDP growth in 2023: continued to expand at a solid pace in the first half of 2023 by 2½ percent (seasonally adjusted annualized rate).", "Private consumption supported by increasing real wages and gradual decline in pandemic-induced excess household savings.", "Fixed investment growth robust, driven by ongoing Next Generation EU (NGEU)-funded investment.", "High-frequency data: economic momentum remained robust in Q3 2023 despite natural disasters (heatwaves, wildfires, and floods).", "Unemployment rate: declined to 10 percent in September (a decade low).", "Inflation (October): headline 3.8 percent (y/y); core 3.6 percent (y/y) — decelerated due to normalizing energy prices and base effects but remain high amid tightening labor market.", "Residential real estate prices: increased by more than 50 percent since the trough in 2017 but remain below pre-Global Financial Crisis levels.", "Growth projections:", "Inflation projection: Headline inflation projected to reach 2 percent by end-2025 as pressures on core inflation dissipate only gradually.", "Progress cited in digital transformation and integration of government services.", "Labor market reforms: modernization of labor legislation and public employment services facilitating labor market adjustment since the pandemic.", "Enhanced competition authority actions increased market competition.", "Potential growth: estimated to have turned positive in 2022 for the first time since the sovereign debt crisis.", "Recommendations to boost supply-side performance:", "Asset quality improvement: NPL ratio declined below 5 percent in 2023Q2 in systemically important banks, supported by securitizations under the Hercules program.", "Banks: higher net interest margins and strong rebound in profits bolstering capital adequacy.", "Liquidity: sizable liquidity buffers maintained despite substantial repayments of ECB’s TLTRO.", "Financial stability recommendations:", "Fiscal consolidation aim: continue growth-friendly consolidation to strengthen public debt sustainability while supporting inclusive and green growth.", "Fiscal numbers:", "Policy guidance:", "Upside and downside risks to growth and inflation:", "Climate challenge: dominance of fossil fuels in energy necessitates strong implementation of renewables policy framework.", "Recommendations for green transition:", "[Greece and the IMF](http://www.imf.org/external/country/GRC/index.htm)", "[IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)", "[Mission Concluding Statements](https://www.imf.org/en/news/searchnews)", "[PRESS CENTER](http://presscenter.imf.org/)", "[https://www.imf.org/en/home](https://www.imf.org/en/home)" ], "alternates": { "markdown": "/en/news/articles/2023/11/14/greece-cs-2023/index.md", "json": "/en/news/articles/2023/11/14/greece-cs-2023/index.json", "bundleManifest": "/en/news/articles/2023/11/14/greece-cs-2023/bundle-manifest.json" }, "generatedAtUtc": "2026-09-26T02:29:58.195Z" }