Private consumption dynamics remain strong despite inflationlearns Alfa Bank in the latest Weekly Economic Development Bulletin published yesterday. As the Bulletin states, although in the past two years the country’s growth pattern has been gradually attachments fixed capital, h consumption retained its leadership in the contribution to the economic growth of the country. OUR private consumption increased by 5.8% in 2021 and by 7.8% in 2022, making a decisive contribution to the recovery of losses from the pandemic in terms of gross domestic product (GDP).

This conclusion of the Bank’s Economic Research Department (Chief Economist Panagiotis Kapopoulos) is important as the government’s goal is to reduce the share of private consumption in GDP, which is still very high today, to 69%. On the contrary, the government aims to increase the share of investment in GDP, which is currently 14%, and reach the EU average. which is about 22%. Already in the last two years, there has been some increase in the participation of investments, since they averaged about 11% of GDP in the previous decade.

The bank’s bulletin notes that consumer spending is largely supported by the use of savings accumulated during the pandemic.

The goal is to increase the share of investment in GDP, which is 14%, and reach the EU average. which is 22%.

As analysts explain, this means that the average Greek household has exhausted the official income declared by them in 2022, and some have probably “had a hand” in deposits. The latter, however, have maintained an upward trend, while there are always undeclared incomes that can stimulate consumption and deposits. The fact that real estate values ​​have risen also increased consumption as households felt their wealth increased.

During the first phase of the pandemic, private consumption fell more sharply than gross disposable income, according to the Bulletin, pushing gross saving into positive territory. Consumer spending rebounded in 2021-22, with private consumption at current prices growing faster than gross disposable income, leading to a reduction in gross saving.

Other factors highlighted in the Alfa Bank Bulletin as driving growth in household consumer spending include: 1. Employment growth of 5.4% last year, which supported the average gross disposable household income (growth of 7.4% in 2022. ) and 2. Even partial adjustment of nominal wages to inflationary conditions, as they rose significantly in the third and fourth quarters of 2022 (up 7.4% and 7.1% year on year respectively), which is partially offset by the measures support adopted by the government to combat the effects of the energy crisis, loss of household purchasing power due to inflation.

Consumption is expected to support economic activity for another year in 2023, albeit more gently than in previous years, the Bulletin says. According to the forecasts of the Ministry of Finance, in the Stability Program until 2023, investments will increase by 13.2%, and personal consumption by 1.2%.