Challenges ahead for Greece's recovery under Mitsotakis' second term
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Economy is still enjoying post-pandemic re-opening inertia
The Greek economy has benefited from the post-pandemic period of the prolonged re- opening effect and of the related demand for tourism services. The tourism catch-up still seems to be in place: year-to-date, the number of arrivals has already reached above the levels of 2019 over the same period.
The economic rebound of 2022 has brought about improvements in the labour market which continue to this day. In May, the unemployment rate fell below 11% for the first time since late 2009. Employment gains, helped by cooling inflation, have continued to propel disposable income, ultimately supporting consumption.
Tourist arrivals back above pre-Covid levels (January-May)
Keeping up the recovery pace won’t be easy
Mitsotakis’ second legislature will be a challenging one. The election result very likely reflected a call for continuity from the electorate, particularly in the economic domain. Securing continuity in growth against a backdrop of normalising monetary and fiscal policies will not be an easy task.
A stable return to amply positive interest rates might complicate things on the private investment front, where Greece has yet to fill an investment gap since the times of the sovereign debt crisis. Here, keeping a strong focus on the implementation of the recovery and resilience plan might prove decisive.
On the fiscal front, as elsewhere, the restoration of fiscal rules in 2024 will reintroduce constraints that had disappeared over the recent crisis years. The good news is that Mitsotakis is having his second term in office at the height of the summer tourism season, which is a good start.
