An unusually political message emerged from the annual report of Bank of Greece (BoG) Governor Giorgos Provopoulos on Tuesday, as in the context of revised forecasts for a greater recession and increased unemployment he called on society and political forces to decide whether they want the country to stay in the eurozone by applying the agreement with Greece?s creditors, or drop out and slide back decades.
Just a few days before the crucial May 6 general election, Provopoulos sent a universal message, warning that the country needs ?full readiness from the very first day after the election period so as to win the war on all fronts.? He also called on citizens and the political system to undertake ?the historic responsibility of choice? for the future and asked for ?the greatest possible consensus? in society and in the political sphere, signalling that he is in favor of a coalition government.
In his report, Provopoulos revised the Bank of Greece estimate of last month for a 4.5 percent shrinking of the economy this year, suggesting that recession will amount to nearly 5 percent. He went on to warn that ?unless recession is contained, the fiscal targets are all questionable.? He added that the state will have to stop having a ?dominant position in the economy? and that the private sector will now have to take over.
In tacit criticism of the governments of George Papandreou and Lucas Papademos, Provopoulos commented that ?it is now clear the changes implemented were insufficient.?
Greece can achieve a primary surplus as of 2013 and its economy is expected to begin recovering from the end of that year, Provopoulos said. Unemployment will top 19 percent this year, up from 17.7 percent in 2011, while bad loans in bank portfolios will amount to 35 billion euros, or 15.9 percent of all loans.
The BoG governor expects salary reductions to continue this year -- to the tune of about 10 percent -- and to carry on in 2013, while asking for a redraft of the negotiating rules between employers and employees. The average cost of labor per product unit will shrink for a third consecutive year, by about 5.9 to 6.8 percent across the economy this year and by 6 to 6.5 percent next year, Provopoulos said.