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Greek Economy seen Growing 5.0% in 2022, Central Bank says

ATHENS, Dec 22 (Reuters) - Greece's economy is projected to grow 5.0% next year after expanding an expected 7.2% this year, the country's central bank said in an interim monetary policy report on Wednesday.

"In 2022 the economy's growth rate is projected to reach 5.0% and 3.9% in 2023, provided the economy continues to be significantly boosted from tourism, the euro zone's recovery and the acceleration of investments," the Bank of Greece said in the report.

The Bank of Greece said the recent deterioration of epidemiological data, combined with the population's low vaccination coverage relative to the European average, increases uncertainty and the risks for economic growth.

Still, medium- to long-term prospects for Greece's economy remain "very positive", supported by the launch of investment projects and reforms associated with the National Recovery and Resilience Plan.

"Consumer expenditure is expected to continue to increase over the next two years, albeit at a more moderate pace, in line with rising employment" the report said.

Strong inflationary pressures this year largely reflect base effects from negative inflation in 2020 and sharp increases in energy, food and imported intermediate product prices, it said.

But Greece’s inflation rate remains one of the lowest in the euro zone and for 2021 as a whole it is not expected to exceed 0.6%.

Greece is expected to receive around 40 billion euros from the EU’s multiannual 2021-2027 budget and 32 billion from the European recovery fund NextGenerationEU, while also attracting foreign direct investment, the Bank of Greece said.

Turning to the banking system, the central bank said the stock of non-performing loans (NPLs) fell to 20.9 billion euros at the end of September, a 26.3 billion euro decrease from end-December 2020 and an 86.3 billion euro drop from their March 2016 peak.

Banks' NPL ratio to their total loans fell significantly but at 15% in September remains high relative to the EU average of 2.3%.

"The magnitude of the fallout from the pandemic, which cannot yet be quantified, is expected to manifest itself with some lag, after support measures have been fully lifted. Banks need to reassess the adequacy of their credit risk provisions," it said.

Reporting by George Georgiopoulos and Lefteris Papadimas; Editing by Kirsten Donovan

Source: Reuters

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