The Foundation for Economic and Industrial Research (IOBE) has undercut the government’s growth forecast for this year and warns that the country risks slipping back into a financial crisis if the reform effort is abandoned and the production model is not changed.
In its quarterly report on the Greek economy IOBE said gross domestic product will grow 2.1 percent in 2018, against the government’s 2.5 percent forecast, while in 2017 GDP is seen to have expanded by just 1.3 percent, compared to an official estimate of 1.6 percent.
“No doubt the economy’s conditions and prospects are improving,” said IOBE President Takis Athanasopoulos on Wednesday, “but this improvement does not constitute the definitive end of the crisis. I want to underscore the considerable structural problems of our economy, which have not been tackled, and the risk that the positive developments may be misinterpreted, leading to the abandonment of the reform effort.”
Nikos Vettas, general director at IOBE, added that “if there is backtracking, the economy will slide back into crisis in a couple of years, needing support from the creditors.”
He went on to estimate that there will still be some monitoring after the program ends this summer, and the debt-easing measures will be conceded under certain conditions.