The Greek economy is underperforming expectations, leading international observers to make downward revisions to gross domestic product forecasts for this and next year, while the country’s competitiveness was dealt a blow last year after a period of improvement.
Swiss bank UBS noted a clear deterioration in the Greek economy, saying that in contrast to what it terms as “optimistic” forecasts by the European Commission and the International Monetary Fund, the economic contraction in Greece this year will amount to 0.9 percent.
In its report issued on Wednesday the lender noted that the latest financial data (showing GDP shrinking 1.4 percent in the first quarter) confirm its view that pressure on the Greek economy in the first half of the year will be strong, mainly burdening consumers due to the continuing austerity.
In a separate report, the Organization for Economic Cooperation and Development (OECD) forecast a 0.2 percent contraction of the Greek economy this year, but undercut the recovery that the eurozone anticipates for Greece (2.7 percent) in 2017, saying the rebound will only amount to 1.9 percent.
The OECD also recorded an increase in unit labor costs in 2015, owing to the drop in productivity as a result of the freezing of reform efforts in Greece and despite the reduction in salaries. On this basis, it called on Greece to proceed with the full implementation of the bailout program reforms, while also stressing the need for the lightening of the national debt.
According to the OECD, the weak performance in productivity has contributed considerably toward the reduction in production since the outbreak of the financial crisis. In 2015 the decline in productivity led to an increase in unit labor costs that had declined significantly in the previous years.
“More reforms are required for the economy to swing toward exports and new enterprises,” the OECD report said, adding that reducing bureaucratic procedures and burdens on enterprises will raise productivity and investments.