This year, the Greek economy is showing robust economic growth – almost twice the Eurozone average – and the big question, of course, is whether it can sustain it in the coming years in an international environment of constant turmoil. . For a meaningful answer, we must, on the one hand, look at what growth data are and whether they are repeatable in the coming years, and on the other hand, whether they are vulnerable to environmental shocks.

With a simple analysis, three factors can be identified: the first is the recovery of the economy after a big fall of -9% in 2020 due to the pandemic. The rebound was last year and partially continued this year, but obviously will not continue. The second factor has to do with increased domestic demand, mainly due to theoretical aid packages being handed out like there’s no tomorrow, and to a lesser extent due to rising investment, which is nonetheless recording some progress through the Recovery Fund and real estate. . However, consumption growth will be limited by inflation and deficits, and rising interest rates will reduce the appetite for investment. The Fund’s wallet, of course, will remain, but so far no serious plans have been put forward for its timely and productive use. So the second growth factor will have moderate dynamics.

The third pillar was an impressive surge in tourism, which not only restored 2019 levels, but laid the foundation for further growth in the coming years. Although the improvement of public infrastructure has been scarce, the renewal of tourist units and the response of private organizations in terms of quality and adequacy have been almost exemplary and have contributed to the formation of a Greek tourism product with great international appeal, provided, of course, that it respects the environment and local identity.

Based on these findings, it becomes clear that the course of development of the Greek economy will depend, firstly, on its ability to organize and provide a tourism product and on attracting productive investments in infrastructure and other areas of interest (from networks to digital technologies). transformation).

Let’s take them one by one. The outlook for tourism looks optimistic, but it could easily stumble upon a rapid deterioration in the purchasing power of visitors due to the energy crisis and the war in Ukraine, as well as misguided policies in countries with critical tourism demand, as we see in the UK. , which led to the collapse of the pound sterling and, as a result, a reduction in income from holidays. Many analysts are already expecting Thatcher’s social spending experiment to be implemented to offset tax cuts for the wealthy announced by the new government, which will make the situation more burdensome.

But even worse – because it will affect arrivals from many countries – will be the outbreak of geopolitical tensions in the Eastern Mediterranean provoked by Turkey, as happened in the previous decade. The drop in growth will be significant. In addition, the resources available to compensate those who lose will be minimal, as most will go towards energy costs, and the cost of government and business borrowing will become prohibitive.

The development path of a country will depend on its ability to organize and provide a tourism product, as well as on attracting productive investments.

In addition, social inequality will rise sharply as micro-businesses, which flourished this year thanks to tourism, will shrink, and local employment will follow. The combination of an international recession, local unemployment and an excessive energy burden could escalate into social unrest with far-reaching and incalculable consequences. Thus, one can see that the current favorable prospects for the Greek economy can easily be scalded by international uncertainty and paralyzed. There are no magic solutions, but certain directions that we should always and everywhere be guided by are the following:

First, the relentless efforts to use the resources of the Recovery Fund in infrastructure and investment. Porro’s course today is far from such an implementation, and the time has come for supra-party mobilization and control over its implementation.

Secondly, the prudent use of public resources, on the one hand, to support really poor households (and not tax evaders with jeeps), and on the other hand, to reduce VAT and thereby suppress inflation.

Thirdly, pressure on the European Union to adopt a bolder policy to reduce energy costs, as well as direct support for the most energy-intensive sectors of the economy. None of this is given, but nothing is impossible either.

* Mr. Nikos Christodoulakis is an honorary professor at the Athens University of Economics and Business.