ATHENS — The Greek Parliament passed on Wednesday night the state budget for 2020 that provides for an increase in the economic growth rate as well as a rise in exports and investments.
The budget drafted by the Greek government passed with 158 votes in favor among the 300 member-strong assembly, Greek national news agency AMNA reported.
It anticipates the economy will expand by 2.8 percent on an annual basis, up from a projected 2 percent in 2019. It also includes tax breaks of almost 1.2 billion euros (1.33 billion U.S. dollars).
“The budget gives some breathing space to the middle class and supports the weakest through a comprehensive program of tax cuts. It also creates vital room for growth,” Greek Prime Minister Kyriakos Mitsotakis said, addressing the plenary shortly before the roll call vote.
Nikolaos Frangos, Athens University of Economics and Business professor and board member at the Center of Planning and Economic Research (KEPE) said on Wednesday that “there is a 50-50 chance of Greece achieving such a growth rate,” he said, “I’d say it is more likely that it expands by 2.4-2.5 percent, closer to most international estimates.”
In its latest report on the Greek economy, the European Commission projected last month a growth rate of 2.3 percent for 2020.
“There are three parameters on which Greek growth will depend next year,” commented Antonis Zairis, vice-president of the Association of Business and Retail Sales of Greece and assistant professor at the Neapolis Pafos University. “They are consumption — that will need to turn more to locally produced goods as opposed to imports — investments and exports, all of which require dynamic interventions,” he said.
“There is a risk of failing to meet the requirements for the reduction of public expenditure,” added Zairis, urging caution on the implementation of the fiscal policy.
The Finance Ministry foresees the primary budget surplus of just over the agreed target of 3.5 percent of the gross domestic product, at 3.58 percent according to the calculation method used by the country’s creditors.
Employment is projected to expand 1.8 percent from 2019. Inflation will only marginally grow from 0.6 percent this year to 0.7 percent in 2020.
Exports are seen growing 5.1 percent, while the increase in domestic demand is set to take imports 5.2 percent higher.
The budget also projects the increase in the ratio of investments to the gross domestic product from 11.9 percent this year to 13.1 percent in 2020 – or 25.8 billion euros – when the eurozone average is estimated at 21.4 percent of GDP next year.
Frangos questioned “where those 25.8 billion euros will come from”, saying “I think a target of 12 billion euros for 2020 would have been more realistic.”
Zairis pointed out that “on investments, we need to run much faster, both in attracting foreign investors and in leveraging domestic investments, that we should not underestimate.” (1 euro = 1.11 U.S. dollars)