Monday, December 26, 2022

Update On the Dramatic Return Of Greece's Current Account Deficit

In my article of July 29 of this year, I projected for 2022 a dramatic return of Greece's current account deficit which, in 2021, was already a rather high 12,3 BEUR. A linear extrapolation of the figures for the first 5 months would have lead to an annual deficit of 24,2 BEUR. Since the tourist season was not reflected in the extrapolation, I projected that the actual 2022 figures would turn out quite a bit better. 

Update after 10 months: it seems rather certain that 2022's current account deficit will reach at least 20 BEUR! That is at least 10% of GDP. A current account deficit of 10% of GDP is a horrendously high figure. Normally, it would make alarm bells go off. 

Alarm bells won't go off in the case of Greece because there is no risk of a near-term financial crisis. Greece has a relatively small amount of interest expense and principal of debt doesn't really start maturing until the early 2030's. And money will flow in from the EU Recovery Fund. So there really won't be any major financial constraints during the 2020's. 

When there are no financial constraints while money flows rapidly, all sorts of memories of Greece's past come to mind!