Bank of Greece forecasts further GDP decline of 4-4.5pct in 2013

The country's central Bank of Greece (BoG) has predicted a further decline of the national GDP of 4-4.5 percent in 2013, sources said on Monday morning, citing the BoG's interim report on monetary policy that will be submitted to parliament later in the day by BoG governor George Provopoulos.

The interim report will stress the need for adoption of a national plan for growth, and estimates that the recovery of the economy will be a basic tool for dealing with the challenges the Greece is facing: from the weight of the state debt to the budget deficit and spiraling unemployment.

The BoG report underlines that the crisis has struck a blow to the Greek economy corresponding to that of the crash. Indicatively, real GDP slumped by 20 percent and continues to recede. Unemployment jumped to 25 percent from a percentage below 8 percent and continues to rise. The standard of living has spiraled down and continues to decline.

However, the BoG ascertains that the first signs of improvement in competitiveness are starting to become visible.

Specifically, the BoG predicts that competitiveness will have been fully regained by the end of 2013, or by 30 percent of the accrued loss of the competitive cost recorded since 2001.

On the banking system, Provopoulos will recall the steps that have been made to date for their streamlining.

Specifically, six banks have been streamlined, including the ATEbank agricultural bank, which represents the biggest relative example in Europe to date. The rest of the banks are in the process of mergers. Further, all depositors are fully protected so as to fully ensure fiscal stability.

The BoG also assesses that the process of recapitalization of the systemic banks should be completed by April. The report notes that completion of the process will result in larger, well-capitalized banks, increased confidence on the part of the depositors and the ability to return to the capital markets.