IOBE: Reforms are the only way for economy to return to growth
Reforms are essential if the country is to return to growth and the gross domestic product is to achieve high expansion rates, according to a report released on Wednesday by the Foundation for Economic and Industrial Research (IOBE).
During the presentation of the organization’s quarterly report on the Greek economy, IOBE general director Nikolaos Vettas stated that “for growth to come, it is essential to push structural reforms deeper,” noting that not all the economy’s problems have been solved as “the stabilization of the economy has not yet reached the end of the road.”
The IOBE forecasts that the economy will stabilize this year, with a possible slight increase of GDP. However it warns of the political risk due to next month’s elections: “The current election cycle is creating uncertainty and has led enterprises and households to wait before making decisions, even though this does not concern [parliamentary] elections,” the report notes.
Vettas said it is both vital and urgent that the Greek economy achieves high growth rates. In this context there are five key conditions for structural changes to be implemented. They are the creation of broader political and social consensus, which will involve clashes with special interest groups, the application of specialized knowledge regarding specific problems, investment in a clear financial policy in general, and a determined approach toward the adoption of reforms.
The foundation’s forecasts for the country’s economy, presented by IOBE scientific director Angelos Tsakanikas, suggest that the first two quarters of the year will show negative growth, while the second two will finally bring the GDP back on a growth course. Regarding unemployment, the IOBE says that there will be a small decline this year, bringing it down to 26 percent, while the consumer price index will remain in negative territory, at a rate of 0.6 percent.
Vettas said the country’s new growth model for the decades to come should be built on fiscal stability and reforms, adding that there are sectors where investments can be made in the short term to strengthen the economy, such as tourism, the primary sector, manufacturing, food, energy, waste management, as well as infrastructure and transport.
