Significant de-escalation balance sheet deficit current operations, with its 9.7% GDP in 2022 to 6.5% of GDP in 2023 and up to 4% on average in 2024-2026, the study predicts National Bank.

The forecast is based on the fact that the jump in the balance sheet deficit in 2022 occurred mainly due to an increase in prices for fuel, which is declining this year. In addition, the surge in post-pandemic demand, which is also expected to subside, has helped widen the deficit.

Analysts at the Economic Analysis Department of the National Bank (Chief Economist Nikos Magginas) note that a significant expansion of almost 8 billion euros in the current account deficit (CTA) in 2022 has raised legitimate questions and concerns about the possibility of new imbalances. emerging in the economy. However, they argue that much of the deterioration is due to extraordinary and largely exogenous and reversible factors.

Thus, they note that most of the expansion of the ITS deficit in 2022 is associated with a doubling of the fuel balance deficit, which reached €13.2 billion, due to a doubling of their average price. However, this year in the first quarter, oil prices fell by 20% and natural gas by 46% and are expected to remain 25% lower on average than in 2022.

Thus, the fuel balance deficit is expected to decrease by 2.3% of GDP. Additional savings of 1% of GDP can be obtained by reducing the energy dependence of the country and turning it into an energy hub.

The non-fuel trade deficit also widened by €5 billion in 2022, mainly due to higher import prices. This increase in current prices mainly affected imports of consumer goods and capital goods (19% and 6.4% p.a. respectively in 2022), with the latter being directly correlated with higher investment in fixed assets (11.6%) and also with replenishment and active accumulation of stocks at the expense of the enterprise.

In 2023, a study by the National Bank predicts that this deficit, excluding fuel, will narrow slightly by 0.3% of GDP, mainly due to the containment of import spending, as the impact of the pandemic on demand and inflation remains high.

In addition, the national government predicts a 10 percent increase in tourism revenue this year, which will help reduce the deficit to 6.5 percent of GDP.