GREEK NATIONAL PRODUCTIVITY BOARD ANNUAL REPORT 2021
National Productivity Board. 2021. | ISSN 2732-9305 (Print) ISSN: 2732-9313 (Online)
This annual report underscores the crucial role of productivity and efficiency in the formulation of comprehensive EU and national policies and the resilient and sustainable growth of the Greek economy. Several current issues regarding the recovery rate, investments from the Recovery and Resilience Facility (RRF) of the Next Generation EU (NGEU), the implementation of structural reforms, productivity developments and competitiveness indicators are analysed, together with potential risks and long-term challenges, which should be tackled within a comprehensive strategic development framework. It is argued that the country must reverse the divergence of its economy from the corresponding EU average, through promoting its efficiency and digitisation, attracting investments, and increasing its integration in global value chains and regional output/employment multiplier effects against import multipliers.
The growth projections which are made on the basis of alternative economic scenarios underline the considerable expansion opportunities as well as sources of uncertainty that may hinder growth dynamics. The Greek National Recovery and Resilience Plan (Greece 2.0) provides both short- and medium-term prospects for productivity growth, through supporting private investment, green transformation, digitisation and skills development. Yet critical issues such as those related to macroeconomic stability, high reliance on services’ receipts from tourism and transport, core-periphery disparities, and adverse demographic trends should be appropriately addressed.
Despite the positive impact of the pandemic on the acceleration of digitisation and attraction of investment resources, social and spatial inequalities, current account deficit, debt-to-GDP ratio, fiscal imbalances and cost/price competitiveness further aggravated. Although there are signs of strong digital competitiveness at the business level, there are still considerable gaps and weaknesses at the individual/household and employee levels as well as at the state and infrastructure levels.
This annual report gives special emphasis on two major challenges for the sustainable and resilient future of both the EU and the Greek economy. The first challenge refers to the provision, efficiency and competitiveness of health services, in order to support productivity and strengthen the ability to tackle new health crises. Our analysis shows that Greece has diminished the inefficient usage of health resources in recent years, while the Greece 2.0 plan can further enhance resilience and efficient resource allocation in the health system. Nonetheless, Greece is ranked low in the competitiveness index related to health, having weaknesses in public spending on health, health infrastructure, and universal health care coverage, due to the high rate of out-of-pocket payments of households, who pay 35.2% of the total current health expenditure.
The second challenge concerns the productivity and competitiveness of the energy sector and the ability to ensure a smooth transition to decarbonatisation and affordable energy. During the last years, Greece implemented several reforms to accomplish harmonisation with environmental targets, achieving to reduce the greenhouse gas (GHG) emissions per capita and the intensity of GHG emissions of energy consumption, which is below the EU average. It has also expanded the competition in the energy market and set the goal of withdrawing all lignite plants by 2028, developing a Just Transition Development Plan for lignite areas.
Nevertheless, electricity and gas prices for households, expressed in purchasing power standard (PPS), in the country are among the highest in the EU and the share of energy poverty remains much higher than the EU average, which makes the national economy more exposed to the recent increase of energy products’ prices. At the same time, Greece’s economy shows increased dependency on energy imports and much lower energy productivity than the EU average. Thus, the considerable budget of the Recovery and Resilience Plan (about 6 billion euro) allocated to energy and green transition projects should be fully exploited to expedite the supply of decarbonised and affordable energy and achieve an energy competitive, inclusive and carbon-neutral growth, with the least possible negative effects on the economy and the society.