Greece reduces debt “on paper”: what is behind GDP growth

Greece GDP growth successful 2026 whitethorn beryllium mostly the effect not of existent economical development, but inflation.

According to calculations, with an ostentation complaint of astir 4.6% nominal GDP will summation from €248.4 billion up to astir €259.8 billion – that is, astir 11.4 cardinal euros.

Growth without growth

Key Point: this summation tin hap without an summation successful production, concern oregon productivity.

In information we are talking astir nominal growthcaused by an summation successful prices, not economical volumes.

Effect connected authorities debt

With a changeless indebtedness level (about €362.8 billion) indicator debt/GDP automatically reduced:

• up to astir 139.6% with ostentation 4.6%;
• up to astir 132.8% with ostentation of 10%.

That is, formally the indebtedness load is decreasing – without existent betterment successful the economy.

Who wins and who loses

This mechanics really increases tax revenuesince prices are rising, and with them the tax base.

However, the downside is obvious:

• real incomes of the colonisation are declining;
• the load connected households and businesses is growing;
• the volume of backstage indebtedness increases;
• Purchasing powerfulness decreases.

According to a fig of estimates, Greece remains among the countries EU with the lowest existent incomealong with Bulgaria.

Editorial comment

Inflation successful caller years has changed not lone prices, but besides the very structure of the economy.

Since 2021, the cumulative terms summation successful Greece has been astir 20% oregon morewhich straight affected nominal GDP. It accrued mostly owed to the emergence successful prices of goods and services, and not lone owed to existent maturation successful production.

This creates the effect of “paper improvement” successful macroeconomic indicators. The ratio of nationalist indebtedness to GDP decreases, the fund receives further revenue, and the authoritative representation looks much stable than the regular world of citizens.

At the aforesaid clip government indebtedness benefits from inflation: Its existent value decreases, particularly if a important information of the liabilities person fixed rates and agelong maturities.

The situation looks wholly antithetic for citizens and businesses. Private debts are getting heavier owed to rising costs of living, rising involvement rates, unit connected incomes and declining purchasing power.

Official ostentation reflects lone the mean picture. In practice, terms increases are highly uneven. By categories that signifier the ground of regular expenses – food, energy, fuel — the terms summation turned retired to beryllium importantly higher than the mean index.

It is these categories that signifier the feeling “real inflation”that households look each day.

• bread and basal food — noticeable and sustainable summation successful price;
• meat and nutrient products — maturation by 1.5–2 times and higher successful definite segments;
• fruits and vegetables — precocious volatility with a wide upward trend;
• energy and fuel – crisp jumps affecting the full terms chain.

The effect is simply a spread betwixt statistics and existent life. For the budget, ostentation tin look similar rising incomes and improving indebtedness indicators. For a family, small concern oregon retiree, this means something wholly different: expenses are increasing faster than income.

This is however the effect of hidden impoverishment is formed. Nominal indicators whitethorn beryllium improving, but existent purchasing powerfulness is declining and the indebtedness load connected citizens is becoming heavier.

And the main question present is not however bully the debt/GDP ratio looks, but however galore radical tin unrecorded usually connected their incomes aft paying for food, energy, rent, taxes and aged debts.

If the system is increasing connected paper, and beingness is becoming much costly successful the store, this is nary longer an summation successful well-being, but a statistical illusion for which citizens pay.

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