ECONOMY

OECD calls for further measures

Delays in reforms and the lack of needed resistance to pressures from abroad mean that the Greek economy will not be able to avoid plunging into recession, according to a report by the Organization for Economic Cooperation and Development (OECD). In the economic survey made public yesterday, the OECD considers recent measures by the government to stimulate the economy as insufficient and, therefore, reduction of the budget deficit to below the EU threshold of 3 percent of gross domestic product (GDP) is thought to be impossible. The OECD has now predicted that the deficit will instead soar to over 6 percent of GDP and has given clear recommendations for immediate structural measures to contain the deficit and public debt and to avert the disintegration of the social security system. It is calling for strict adherence to the budget, a reduction in spending, a single mechanism for receiving tax payments and social security contributions, a more efficient mechanism for collecting revenues, a reduction of tax exemptions and taxes for third parties etc. As for revising the social security system, the OECD proposes extending the length of working life to 37 years of contribution before one is eligible for retirement. The report suggests that the worsening of most of the fundamental figures has contributed to the sudden slowdown in growth that will lead to recession this year: The OECD predicts GDP will shrink by 1.3 percent in 2009 and before showing marginal growth of 0.3 percent in 2010. «Greece has initially held up better during the global economic crisis than many other OECD countries. It is unlikely, however, to avoid a recession, as confidence, tourism and shipping receipts have all fallen substantially,» the report reads. The report was originally drafted on June 15, but was revised on June 29 to take into account the measures taken in mid-June by the government. It estimates that the measures could reduce the deficit by no more than 1.5 percent this year and 2.5 percent next year.