UBS ups Greek economy’s 2022 growth forecast on tourism tailwind

Greece’s economy could grow by 5.7% this year from 4.0% previously forecast as the country benefits from a strong rebound in tourism, UBS said in a research report on Wednesday.

“Our new growth projection is 150 basis points above market consensus of 4.2%,” UBS economist Gyorgy Kovacs said in the report.

Tourism revenues are expected to reach 20 billion euros this year, topping projections of 15 billion and last year’s 10.5 billion, including a positive effect on job creation, the report said.

Central bank data showed that non-resident arrivals rose 241.5% in June on the year, with revenue up 224.5%. Arrivals corresponded to 89.0% of their level in 2019, a record year for tourism, while revenue exceeded it.

Greece’s economy expanded in the first three months of the year at a faster pace than in last year’s fourth quarter but on an annual basis the rate of growth eased to 7.0% percent from 8.1%.

Official second quarter gross domestic product (GDP) data is due to be released on Sept. 7.

UBS sees downside risks this year from a gradual deterioration in business sentiment and potential disruption to gas flows to Europe. It revised its 2023 Greek growth forecast down to 4.0% from 4.7%.

It said average inflation could easily top 9% this year.

Greece’s annual consumer inflation slowed to 11.6% in July from 12.1% the previous month, remaining close to its highest level in nearly three decades.

The government is expected to spend 6 billion euros on energy subsidies this year, about 3.0% of GDP. More support may be announced on Sept. 10 although likely to only amount to around 1.0% of GDP, UBS said.