The European Stability Mechanism (ESM) has sounded the alarm on growth
The European Stability Mechanism (ESM) has sounded the alarm on growth prospects in the eurozone, including Greece, in a report warning that GDP growth could fall to just 0.5% by 2029 from 1.3% in 2023—unless labor productivity improves significantly.
Regarding Greece and other peripheral countries in the eurozone, the study notes that in the case of Greece, as well as other peripheral nations such as Italy, Spain, and Portugal, the higher growth rates recorded in recent years compared to Germany and France have been largely driven by increased employment—particularly in the services sector. In Greece, the manufacturing sector has also played a significant role in this employment-led growth.
As the data revealed, economic growth in the common currency bloc was primarily attributed to increases in employment levels since 2015, a factor that has offset stagnating productivity. Productivity growth has hovered near zero, at just 0.1%, according to the report.
The report highlights the significance of boosting productivity to sustain economic growth in the eurozone, underlining that failing to achieve this would result in severe consequences.
The organization projects that potential growth could slump to 0.5% by 2029, far below current forecasts. By comparison, the European Commission estimates growth at around 1% by
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