Greek economy to return to growth in late 2013-early 2014, IOBE

The Greek economy will return to positive growth rates by the end of 2013 or early 2014, the Institute for Economic and Industrial Research (IOBE) said on Thursday.

In its monthly report on the outlook of the Greek economy, IOBE said the country’s Gross Domestic Product was expected to shrink by 4.5pct this year, with negative growth rates higher in the first two quarters of the year and slowing below the average level in the second half of 2013.

The inflation rate is projected to reach an average 1.0 pct this year, significantly lower compared with 2013, while the unemployment rate is expected to rise to 24.5pct in 2012 and to jump to 27.3pct in 2013, although a slowing down in economic recession, the implementation of major investment projects and extensive adoption of structural changes in labor markets were expected to slow down a rising unemployment rate.

The Institute said the country did not have room for complacency and noted that the release of the next tranche of rescue aid to Greece – scheduled for January, February and March – were linked to specific terms. A precondition for completing the government’s program was a widespread understanding of the importance of the measures promoted, social consensus and strict adherence to the principles and the criteria of social justice. The Institute stressed that the most convincing evidence of social justice would be an effective response to the problem of tax evasion and a deeper tax reform.

Private investments were the main tool towards economic development, it said, while a recapitalization plan will restore capital adequacy in the banking system. Forthcoming mergers in the banking sector with the creation of less but strong players, is another major too, IOBE added.

SOURCE: ATHENS NEWS AGENCY