Publication - Winter 2017 Economic Forecast - Greece
GREECE Signs of recovery linked to programme implementation
GREECE Signs of recovery linked to programme implementation
The Greek economy has been gradually growing since the conclusion of the first review of the ESM programme. Brighter economic sentiment is supporting recovery in domestic demand, reflected also in labour market developments. Public finances are performing better than expected and the overall macro outlook remains positive, though subject to downside risks.
Growth in third quarter points to the prospect of a sustained recovery Greece’s economy grew by 0.8% q-o-q (1.8% y-o-y) in 2016-Q3 in seasonally adjusted terms following 0.4% (q-o-q) in 2016-Q2. Growth was mainly driven by private consumption, investment and exports. While part of these increases is explained by base effects, short-term indicators overall point towards positive growth in 2016. Economic activity is up in industry, the retail sector and tourism, while exports have also regained strength since the shock in 2015.
Real GDP growth is projected to have reached 0.3% in 2016 reflecting the improvement in business and consumer confidence since the conclusion of the first review of the ESM programme and the good progress that has been made in clearing public sector arrears, which has led to higher liquidity in the corporate sector.
Contingent upon the timely completion of the second review of the ESM programme, Greece’s economic recovery is expected to gather pace in 2017 with growth of 2.7%, on the back of improving financial conditions amid a gradual relaxation of capital controls. Private consumption and investment are projected to accelerate and the contribution of net exports to become positive.
Real GDP is expected to continue recovering at a robust pace in 2018, with a growth rate of 3.1%. The labour market has been improving for the last two years. Employment grew by 2.4% on average in the first 10 months of 2016, and is projected to grow at a stable average rate of 2.2% until 2018. Unemployment is projected to have fallen to 23.4% in 2016, down from an annual average of 24.9% in 2015.
Unemployment is set to decrease steadily over the forecast horizon, backed by the impact of labour market reforms supporting flexible forms of employment and wage setting. The contribution of net exports to growth was likely still negative in 2016, since imports rose faster than exports amid higher domestic demand. Going ahead, net exports are expected to turn positive, as improved competitiveness and higher investment in the tradable sector spur exports.
page source http://ec.europa.eu/info/
