Greek central bank sees marginal contraction this year

Greek central bank sees marginal contraction this year

Greece's economy will contract only slightly this year thanks to strong figures expected in the third and fourth quarters, and creditors could help its recovery by giving it more leeway in meeting fiscal targets, the central bank said on Wednesday.

In its first detailed forecast for 2016, the bank said GDP would contract by 0.3 percent "as the positive growth rates expected for the third and fourth quarter should partly offset the negative outcome of the first half.”

Greece's central bank governor, Yannis Stournaras, had said in February there were growing signs the debt-wracked country's deep recession was bottoming out, but gave no figures.

The bank on Wednesday said creditors could help it return to full recovery by lowering the primary budget surplus target it is supposed to hit after 2018 to 2.0 percent of GDP from 3.5 percent. Those figures exclude debt servicing costs.

It also called for other measures to ease the debt burden, including extending maturities and smoothing interest payment over time.

The Bank of Greece said debt relief now could be more beneficial than a few years down the road, when global interest rates might be higher. [Reuters]

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