Greece was in recession last year, as revised data from the Hellenic Statistical Authority (ELSTAT) showed on Tuesday that the economy shrank 0.2 percent compared to 2015 against a previous estimate for zero growth. Furthermore, the Foundation for Economic and Industrial Research (IOBE) forecast that 2017 will close with growth of just 1.3 percent, against a government estimate of 1.8 percent.
That the way out of the crisis is proving more arduous and uncertain than many had predicted was underscored by the two sets of data released on Tuesday, with IOBE Director General Nikos Vettas warning that the recovery may turn out to be “short-term and fragile” unless the pending crucial structural reforms are implemented.
ELSTAT’s downward revision for 2016 is mainly based on consumer spending, which declined 0.3 percent compared to 2015, against a previous estimate in March 2017 for an increase of 0.6 percent.
Even in March, when ELSTAT announced zero growth for 2016, the figures created a headache for Prime Minister Alexis Tsipras, who had previously said the economy had grown in 2016. Yesterday’s revision turned stagnation into recession for another year.
It is also impressive that while the economy shrank 0.2 percent, taxation on products increased 7.8 percent, against a hike of 1.7 percent in 2015 and 0.8 percent in 2014. The revision also revealed that 2014 saw growth of 0.7 percent, against an estimate of 0.3 percent in March. That upward course was clearly interrupted by the January 2015 election.
IOBE undercut the government’s growth estimates for this year and next, with its president, Takis Athanasopoulos, saying, “Indeed, our economy is showing signs of improvement, but its rate remains below what is necessary for the country to leave the crisis behind it for good.” Next year IOBE anticipates growth of 2 percent, against an official forecast of 2.4 percent, putting the achievement of fiscal targets into question.
The weak 1.3 percent recovery rate seen for this year, compared to the original 2.7 percent estimate of the budget and the bailout program, is according to IOBE due to the weak momentum of investments.