The European Commission has confirmed its estimate that Greece’s 2015 budget closed with a primary surplus of 0.7 percent of gross domestic product. However it did note in its spring economic forecasts on Tuesday that this result came mostly by way of temporary measures and argued that the future holds a number of risks for the Greek economy. It also stressed that Athens will need to take measures worth 3 percent of GDP and expects a return to growth from the second half of this year.
In its forecasts Brussels sees Greece continuing in recession this year, but at a smaller rate than previously forecast (0.3 percent of GDP, compared with 0.7 percent anticipated in the winter forecasts), while the economy will expand by 2.7 percent in 2017.
However, it noted that there remain “some serious uncertainties about these forecasts.” The expected rebound “depends on the timely completion of the first review of the ESM program, as well as on positive developments in the money markets and trade,” the Commission’s report stated.
It further cited factors that could have a positive impact on the Greek economy, such as a faster-than-anticipated recovery of business and consumer confidence. In contrast, the risks involved are failing to implement reforms included in the bailout program, a larger-than-expected negative impact from the migrant crisis on tourism and commerce in Greece, and a slowdown in international commerce.
The Commission also confirmed that the measures Greece must take up to 2018, worth 3 percent of GDP, will concern 1.8 billion euros from changes to the social security system, another 1.8 billion from income tax changes, 450 million euros from increasing the top value-added tax (VAT) rate from 23 to 24 percent, and 1.35 billion euros from interventions in civil service salary costs, the taxation of vehicles and special consumption taxes (primarily on energy goods, alcohol and tobacco).