BUSINESS

EU sees growth if reforms pass

ELENI VARVITSIOTIS

TAGS: Finance

The European Commission foresees a strong rebound for the Greek economy in 2017 and 2018, and also expects the primary budget surplus targets to be beaten, but it discerns some risks too, according to its fall forecasts issued on Wednesday.

The Commission estimates that Greece’s gross domestic product will grow 2.7 percent next year and 3.1 percent in 2018, against a 0.3 percent contraction this year. These figures are compatible with those of the bailout agreement. The report explains that the recovery will be based on an increase in domestic demand, in exports and in investments.

Brussels projects the primary surplus at 0.8 percent of GDP this year – against a target for 0.5 percent – and sees that rising to 2.1 percent next year (compared to a 1.75 percent target) and 3.7 percent in 2018 (with the target set at 3.5 percent).

Asked whether the excess in the primary surplus figures could lead to the adoption of fewer measures by the Greek government, the Commission said that the measures cannot be reduced and are tangible proof that the targets set in Greece are achievable.

The report also expects the national debt to climb from 177.4 percent of GDP last year to 181.6 percent in 2016, before starting to drop in 2017. Unemployment is seen declining to 22.2 percent in 2017 and 20.3 percent in 2018, reflecting the impact of the economic recovery on the labor market.

In response to a question about whether the election of Donald Trump as US president could change anything regarding the International Monetary Fund’s participation in the Greek program, European Commissioner for Economic Affairs Pierre Moscovici said that he would not discuss the Fund’s attitude to the political developments in the United States.

“We are trying to move into a virtuous circle with Greece,” the French commissioner said, adding that the target now is for “the bailout to be a success, for reforms to be applied correctly, for growth to return and for confidence and employment to be restored.”

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