Greece has made steps towards creating a more competitive and dynamic economy, the International Monetary Fund (IMF) announced in a report prepared by its staff team following consultations it had with Greek authorities, ANA reports.
The report, nevertheless, noted that the country should remain on the road of reforms, to preserve a general fiscal balance and the restructuring of the banking sector.
Growth has returned to Greece but so far has dropped below expectations, the report said, adding that after a 1.9 percent expansion in 2018, growth moderated in the first half of 2019, constrained by lackluster private investment and under-execution of public investment.
While the unemployment rate fell to 16.9 percent (seasonally adjusted) in July, structural unemployment remains high, and economic activity is below potential. In spite of improvements, bank balance sheets are significantly impaired, and banks continue to reduce the amount of (net) credit provided to the economy. Real GDP growth is projected to moderate slightly to 1.8 percent this year, followed by some acceleration in 2020 to 2.3 percent, supported by fiscal loosening and higher private investment financed mostly by foreign capital inflows.
Directors underscored that Greece’s success within the currency union will require policies to help boost productivity and narrow its competitiveness gap. In this context, they welcomed the government’s efforts to unblock privatization, implement business deregulation, and restore elements of the cornerstone program-era labor market reforms. Directors underlined that the realization of benefits from labor market reform would require meaningful parallel progress with other structural reforms, particularly further liberalization of product markets.
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