Economic conditions will improve in Greece next year, but the government’s ambitious target of a 2.7 percent economic rebound will not be achieved, the Organization for Economic Cooperation and Development said in a report released on Monday. The OECD added that much more must be done for the Greek debt to become sustainable.
The international organization noted that the Greek economy has been performing better than anticipated in the second half of 2016 and estimated that the momentum will grow in 2017 and 2018 as the reforms start fetching results.
It added that the completion of the second bailout review will strengthen confidence, stabilizing the economic and political environment.
However, the organization believes that the target for 2.7 percent growth next year will not be met and sets the bar significantly lower, at 1.3 percent for 2017 and 1.9 percent in 2018. As for this year, it anticipates zero growth for the economy, while discerning a rise in employment.
The implementation of reforms to reduce bureaucracy and liberalize market sectors such as those of energy and transport will increase productivity and growth, while opening up so-called closed-shop professions will attract investments mainly to small and medium-sized enterprises, the report forecast.
As regards the huge volume of nonperforming loans, the OECD called for decisive management of the problem and the enforcement of all relevant legislative initiatives, saying that otherwise the bad loans will undermine the recovery of credit expansion and therefore the support of investments.
The report further warns that even if the ambitious medium-term primary surplus targets set by the creditors are met, the high public debt will undermine confidence.
It stressed the need for the broadening of the tax base and the unhindered operation of the independent General Secretariat for Public Revenue so as to improve tax compliance and collection.
It also anticipates a decline of the jobless rate from 24.9 percent in 2015 and 23.5 percent this year to 23.1 percent in 2017 and to 22.7 percent in 2018.