US economy growing at 3.2% a year, fourth quarter figures show …
Over
to Greece where the country’s leading economic think tank, IOBE, has
not ruled out national output contracting for a seventh
straight year in 2014. Helena Smith in Athens writes:
Releasing its quarterly review earlier today, IOBE was unequivocal: in 2014 the recession-hit Greek economy would finally bottom out, it said, but in sharp contrast to official forecasts it could not be excluded that national output would also contract.
The Athens-based think tank, which was headed by Yannis Stournaras before he took up the post of finance minister in June 2012, said much would depend on the implementation of structural reforms, foreign direct investment and the persistent problem of Greece’s debt overhang – a barrier to international business interest in the country.
IOBE’s research director, Angelos Tsakanikas, who helped draft the report, told me that while the economy was “moving towards zero” it was possible it could still contract.
“There is a slowing down of the depression, we are moving towards stability, towards zero, but this [recovery] is fragile,” he said. “If nothing is done with implementing structural reforms, attracting investment and tackling unemployment, the economy could contract … we could, for example, see it hit minus two.” The macro-economic environment would also play a role. “Last year we had recession in the euro zone. If international trade improves it will be easier for Greeks to export.”
Athens’ pro-bailout coalition government has repeatedly said the economy — which has shrunk by around 25% since the debt crisis began – will begin to recover in 2014, growing by a predicted 0.6%.
Addressing his parliamentary group today, prime minister Antonis Samaras insisted that Greece was about to pull out of recession – at six years its longest in post-war history. “The country has suffered, and is still suffering, but the worst has been avoided and we are now starting to come out of the crisis. Some seem to forget that we stopped the country from collapsing,” the conservative leader told his MPs. “With the help of God and people’s support we will achieve even more.”
After pulling off the biggest fiscal
consolidation ever recorded in an OECD country, optimism is such that Stournaras has declared Greece will also re-enter markets in the summer of 2014. But as IOBE, the
economic institute, emphasized in its report, there are worries that not enough has
been done to implement structural reforms that would improve business by
overhauling an archaic public administration and bureaucracy. Raising
the same concerns the Greek parliament’s independent budget office announced on Wednesday that priority to fiscal reforms (at the behest of creditors) had ultimately
“weakened the [country’s] long-term prospects for recovery.”
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