New model of its development Greek economywith a focus on investment and even higher knowledge and value-added activities is seeing hatching Eurobank study which was posted yesterday. However, according to the study, the path to convergence of Greek investment indicators with European ones is still a long one. In particular, for the share of investment in GDP to reach the average for the Eurozone, an average annual real increase in investment in fixed assets of almost 8% until 2031 is required.

According to analysts (the study was signed by the CEO of the group Fokion Karavia and its chief economist Thassos Anastasatos), investment activity is currently determined by five areas of activity that are changing the development model. They are: 1. Infrastructure and Real Estate, 2. Energy, Green Transition, 3. Telecommunications, Digital Upgrade, 4. Tourism, and 5. Industry.
The study actually looks at investment projects totaling €38.7bn that are estimated to increase GDP, depending on the assumptions, from €47.2bn per decade (at least 12.5 percentage points of GDP) to 91.3 billion euros in twenty years. with a significant impact on small and medium-sized enterprises and the economy as a whole. It is claimed that at least 419,000 people could be employed in these projects and the rest will benefit from them.

Analysts start by noting that 2022 will be the first year after 2009 in which new gross fixed investment exceeds depreciation and fixed capital increases. They also note that 2021 saw a 20-year record of FDI (which reached 5.4 billion euros, or 3% of GDP), and in 2022 it will reach an even higher level. However, they acknowledge that, despite all this, fixed investment in real terms remains below half of the 2007 level, and its share in GDP is almost 10 percentage points less than in the euro area. According to the study, Greece’s GDP is still overly dependent on private consumption (in the 9 months of January-September 2022 it was 70% against the Eurozone average of 52.4%).

Analysts note, moreover, that investment is a necessary condition both for raising citizens’ incomes and for controlling the external deficit, which remains a structural feature of the Greek economy. “There can be no sustainable income growth and economic convergence without the accumulation of capital, physical and intangible, through investment. Any short-term increase in income through income support, such as that experienced during the pandemic and the energy crisis, if it is not accompanied by an increase in investment, will prove unsustainable,” they note.

According to the study, the strategy to be followed should have as its primary goal the production of high and sustainable growth rates without creating a double deficit, while reducing the dependence of GDP on private consumption and increasing the shares of exports and investment.