Greece's Investment Gap

Author/Editor:

Shiqing Hua ; María Méndez ; Xin Cindy Xu

Publication Date:

January 28, 2022

Electronic Access:

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Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary:

Greece’s investment rate plunged following the Sovereign Debt Crisis (SDC) and remained one of the lowest in the world in 2019. This paper explores recent investment dynamics and compares them against estimated benchmarks. Our results suggest that Greece has been under-investing since the SDC, with private investment notably lagging behind. The estimated investment gap ranges from 1.6–8 percent of GDP in 2019. Structural impediments have constrained corporate investment, while business cycle and balance sheet developments have held back household investment. Structural reforms are recommended to remove bottlenecks to corporate investment, improve efficiency of public investment, and boost household investment.

Series:

Working Paper No. 2022/013

Subject:

Frequency:

regular

English

Publication Date:

January 28, 2022

ISBN/ISSN:

9798400201257/1018-5941

Stock No:

WPIEA2022013

Pages:

28

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