ECONOMY

Reforms can offer 13.4 bln to GDP

reforms-can-offer-13-4-bln-to-gdp

The Greek economy stands to benefit to the tune of 13.4 billion euros should it implement the reforms included in the third bailout agreement in full, according to a report on Greece by the Organization for Economic Cooperation and Development (OECD).

The Economic Survey of Greece sees the recession extending into 2016 at a 0.1 percent rate, before recording a 1.9 percent rebound in 2017. It also calculates the cost of the migration crisis in Greece at between 600 and 630 million euros, or roughly 0.35 percent of the country’s gross domestic product.

The organization considers that the debt burden could be eased via a significant extension to maturities, longer grace periods on interest payments, and the transformation of all loans to fixed-rate ones.

The OECD analysis has found that the reforms applied in the period from 2010 to 2014 have contributed 5.6 billion euros to the real GDP. This is despite the far from full implementation of some of those reforms, which drew criticism from the OECD. The Greek economy has much more to gain from the reforms that follow, but it is only their full implementation that will fetch the anticipated gains of 13.4 billion euros for the economy.

According to the report, the Greek economy is faced with two main threats: The first is the migration crisis, with a risk “to the broader economy of the region with potentially serious consequences for growth and fiscal results.” The second is failure to implement the bailout program, with the OECD acknowledging a reduced possibility for serious problems in the realization of the reforms. However, should that threat materialize, uncertainty will grow, “with serious consequences for the Greek economy and the chances of crisis contagion in the eurozone.”

The report further observes that the Greek fiscal adjustment has been more than twice those of Spain, Portugal and Ireland, and argues that any fresh fiscal measures should be avoided. It also calls for the containment of tax evasion, which cuts state revenues and is a long-term weakness for Greece.