The European Commission on Monday revised, upwards, its forecasts for Greek economic growth in 2016, while confirming that the recovery will continue in 2017 — but under the condition that the currently delayed second review of the Greek program will soon conclude.
Specifically, the Commission’s winter report includes an estimate of a 0.3-percent GDP growth for 2016, whereas the previous report in November 2016 predicted the year would close with a decrease of 0.3 percent.
The Commission more-or-less echoes European creditors, and the Greek government, in forecasting economic growth of 2.7 percent this year; jumping to the impressive, by Greek standards, GDP growth of 3.1 percent in 2018.
The deficit in 2016 is gauged at hovering at -1.1 percent of GDP, as opposed to a 2.5-percent deficit, as a percentage of GDP, that it predicted last autumn. The deficit for 2017 will also touch on the -1.1 percent figure; with 2018 expected to post a 0.7-percent budget surplus.
The Commission measured Greece’s debt at 179.7 percent of GDP in 2016; dropping to 177.2 and 170.6 percent for 2017 and 2018, respectively.
Unemployment decreased in 2016 to a still alarming 23.4 percent, with a continuing decrease for 2017, expected to ease to 22 percent.
According to Reuters, Greece will have a primary surplus in the budget of 3.7 percent of gross domestic product next year, exceeding the target of 3.5 percent agreed with its eurozone creditors, the European Commission forecast on Monday.
The size of next year’s Greek primary surplus, which is the budget balance before debt-servicing costs, is a bone of contention between eurozone governments and the International Monetary Fund, which believes it will be only 1.5 percent.
A further disagreement between the two lenders to Greece is what surplus Athens will be able to maintain in the years after 2018. The higher the surplus and the longer it is kept the less is the need for any further debt relief to Greece.
The IMF insists Greek debt, which the Commission forecast on Monday would fall to 177.2 percent of GDP this year from 179.7 percent in 2016 and then decline again to 170.6 percent in 2018, is unsustainably high and that Greece must get debt relief.
Germany and several other eurozone countries say that, if Greece does all the agreed reforms, then debt relief will not be necessary.
The Commission forecast that Greek investment would triple to 12 percent of GDP this year and rise further to 14.2 percent of GDP next year.
Source: Reuters
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