Targeted reforms to boost the country

Reforms in the market, taxation and competition could boost Greece’s gross domestic product by about 25 billion euros within the next decade, a European Commission report has shown.

Structural reforms are of vital significance in the bolstering of growth and could help the economy to expand by 6.2 percentage points within five years or 13 points in a decade.

The Commission’s report stresses that certain reforms could reap positive results even in the short term. Most benefits will likely emerge from improved competition conditions and an increase in labor market participation. A reduction in profit margins, especially in the retail market, could bring about major GDP growth over the next five years.

In comparison with the average of the top three European Union countries, Greece gets very poor marks indeed on a variety of levels. In the competition category, especially regarding the margin between the cost and the retail price, the Greek index comes to 0.34 points when the average for the top EU member states is at 0.13. Were Greece to match the top three performers in the bloc, it would earn 3.1 percentage points in five years’ time and 7.2 percentage points in 10 years.

On the market regulations front, Greece gets 20.1 points compared with 0.13 points for the top EU performers. Although the difference is chaotic, the GDP benefits would have been smaller if Greece matched its top peers: It would add 0.5 percentage points to its GDP in five years and 1.3 points in a decade.

The report also makes special reference to reforms in taxation and the labor market, especially in enhancing skills. Strengthening the participation of women and older citizens in the labor market would add 2.5 percentage points to the economy within 10 years. Changes to the tax system could expand GDP by 0.9 percentage points in five years’ time and by 1.4 points in a decade.

The report concludes that Greece is continuing to progress in its fiscal adjustment program but that more effort is needed if the country is to maintain the momentum.