Bank of Greece cuts its forecast for economic growth to 3.8% in 2022

The Bank of Greece cut its forecast for economic growth to 3.8% this year from 4.8% earlier, and raised its forecast for the inflation rate to 5.2% under the base scenario, in its annual report released on Thursday.

The report, presented by Yannis Stournaras, the central banker, also said that under the adverse scenario Greek economic growth will slow to 2.8% and the inflation rate will rise to 7% this year.

The central banker said Greece has an historic chance to turn the current crisis into an opportunity and stressed that the main goals of economic policy in 2022 should be preserving the dynamism of economic growth and continuing the efforts to obtain the investment grade.

Referring to uncertainties, Stournaras said that in the medium- and long-term, the biggest external risk was climate crisis, and noted that the risk was significant for Greek banks.

Stournaras said that, on conditions, the Greek economy could ensure an average annual growth rate of 3%, if certain decisions were taken such as digitalization of justice, dealing with the problem of accumulated private sector debt and accelerating privatizations. He added that it was crucial also to implement these decisions.

Stournaras said that the Greek banking system has cut its stock of non-performing loans to 12.8% of total loan portfolio, but remained very high, compared with an EU average of 2.1%. He noted that a 39% of NPLs were currently under special repayment programmes but a high percentage of loans showed delays in repayment. He urged banks to remain alert and intensify actions to reduce NPLs. [amna]