It recorded economic growth of 5.9% in 2022, beating the European Commission’s estimate of 5.5%. What factors will influence economic growth in 2023? Can we also deliver an economic surprise by surpassing the European Commission’s estimate of 1.2% growth in 2023?

From a historical point of view, the Greek economy is significantly influenced by (a) the price of oil, (b) price competitiveness and (c) the spread between the cost of a 10-year borrowing by the Greek government and its German counterpart (the spread approaches the investment risk in our country). The price of oil has fallen by about 9% over the past four months. The price competitiveness of the Greek economy has improved by 2.4% over the past twelve months. The spread has narrowed from 224 basis points at the beginning of 2023 to 175 basis points today. So what do the above economic fundamentals mean for our growth outlook?

In the short term (within two years), our economic growth rate is extremely affected (up to 67% of its total change) by the “history” of Greek growth. Our growth rate is then affected by up to 22% of its variation in investment risk. This is followed by price competitiveness with an 8% effect, followed by the price of oil with a 3% effect. In practice, this means that the momentum of the Greek economy, i.e. growth of 5.9% in 2022 will give a significant boost to growth in 2023. At the same time, the improvement in other fundamentals raises reasonable hopes that economic performance in 2023 will exceed current estimates.

The explosive political standoff undermines any prospect of a functioning government, no matter how many election “rounds” are held.

But let’s not rush! And this is because there is a risk of investment risk derailing. International investors are still taking a wait-and-see attitude. The tragic incident at Tempe has sparked a fruitless standoff between political parties over who is (solely) responsible for how our rail network works. The ongoing (explosive) political standoff is undermining any prospect of sustainable governance, no matter how many pre-election “rounds” are held. Is Charilaos Trikoupis to blame for the confirmed failures of our railway network, as Andreas Petroulakis of Kathimerini caustically “sketched”? Of course not!

Starting in 1882, Trikoupis tried to create a Greek state with institutions and infrastructure projects worthy of European states, in which, among other things, I mention the Kopaida drainage, the Corinth Canal and a railway network of over 900 kilometers! According to Trade Economics, the rail network in Greece currently stands at 2,340 km, down from 2,576 km in 2005. Investment in the Greek railway network in 2020 the country is in 33rd place out of 36 countries!!! How satisfied are we with this development more than a century after the age of Trikoupis?

Mr Kostas Miloš is Professor of Finance and Accounting at the University of Liverpool.