In its first monitoring report after Greece emerged from its third and final bailout in August, the International Monetary Fund on Tuesday hailed an “accelerating and broadening” economic recovery, but warned of “rising risks amid still significant vulnerabilities.”
Among several key threats to a Greek rebound, the Executive Board's directors pointed to the reversal of a 2012 reform on collective bargaining in the labor market, a lack of reforms to create a more investment friendly environment, the high level of non-performing loans at Greek banks and a “weak payment culture.”
“The economic recovery in Greece is accelerating and broadening... However, vulnerabilities remain significant and downside risks are rising. Greece’s crisis legacies – high public debt, impaired private balance sheets – along with a still weak payment culture make the economy vulnerable to increasing external and domestic risks,” the report notes.
“Downside risks, not least from legal challenges to past fiscal measures, recent labor market policy decisions, and election uncertainty, have increased,” IMF staff said, highlighting the ailing banking sector as a threat to growth.
The report comes a day after the finance ministers of the 19-member eurozone decided to postpone disbursing 1 billion euros ($1.12 billion) to Greece.
To read the IMF's full report, click here.