By Sotiris Nikas
The economy is showing its first signs of a return to growth as Finance Ministry estimates point to an increase in gross domestic product from the first to the second quarter of the year, Minister Yannis Stournaras stated on Thursday.
“Compared to the first quarter of the year, GDP in the second quarter is showing an increase for the first time since the start of the crisis at least,” said the minister, referring to seasonally adjusted data. “This is the first time that we have estimates that GDP has grown from one quarter to the next.”
Stournaras expects the economy to contract by no more than 3.8 percent, against a revised target for 4.2 percent. This comes after the April-June GDP contraction amounted to 3.8 percent, from a forecast for 4.6 percent. He attributes the improvement in the economy’s performance to the soaring tourism arrivals and the decline in the country’s current account deficit.
Addressing a conference on privatizations and investment, Stournaras stressed that “even in the worst-case scenario, we expect to have a minimal fiscal surplus at the end of the year.” He added that from 2009 to date, the cyclically adjusted primary surplus has improved by 20 percent of GDP, which no other country has managed in peacetime.
Furthermore, Hellenic Statistical Authority (ELSTAT) data showed on Thursday that the industrial turnover index posted a 3.6 percent increase year-on-year in July.
The ministry will be highlighting the improved macroeconomic climate during its negotiations with the chief inspectors of the country’s creditors, set to start on Sunday. Ministry officials intend to build on the favorable climate created by the various positive figures for the country’s economy in a bid to avoid having to impose any new austerity measures.
Talks will first focus on the prior actions required for the 1-billion-euro bailout tranche set to come in mid-December, before moving on to the new measures required for the 2015-16 period, along with the sustainability of the Greek debt and coverage of the funding gap from mid-2014.
On the issue of the funding gap, Stournaras stated that this will be assessed after the inspectors have completed their report, adding that there are alternative solutions to a third bailout package, such as entering the money markets, securing a small loan and utilizing public real estate.
On Friday Stournaras is scheduled to meet with representatives from Moody’s rating agency ahead of the latter’s assessment of Greece’s credit rating. Moody’s is the only agency to have left Greece in the C category, but there are strong indications that the country is set for an upgrade.