Citigroup expects the Greek economy and the budget to miss the targets set by the government and the European Commission for this year and next, as its growth and primary surplus estimates are considerably lower than the official forecasts.
A Citigroup report on Thursday showed the Greek economy will only grow by 1.4 percent this year, much lower than the recently revised official projection for 2.3 percent. The primary budget surplus will miss the target of 3.5 percent of gross domestic product, settling at 3.2 percent instead, according to Citigroup.
For next year, the report projects growth at just 1.5 percent, against the official 2.5 percent, with a primary surplus at 3 percent of GDP. Growth is not expected to pick up in the following years either, amounting to 1.5 percent in 2020, 1.4 percent in 2021 and 1.5 percent in 2022.
Citigroup explained that growth may have returned in 2017, but it is weak as liquidity conditions in Greece remain problematic due to the capital controls, the insufficient external competitiveness and the prolonged austerity.
If those estimates prove correct, they will strengthen the International Monetary Fund’s arguments for bringing forward the reduction of the tax-free threshold to January 2019, instead of a year later.