Thursday, April 6, 2017

The scale of Greece’s economic problems

by Kerin Hope

Financial Times

April 6, 2017

As Greece continues talks with creditors over the next stages of its international bailout programme, Donald Tusk, president of the European Council, has warned that it is “no success story” yet. Further discussions will take place at the meeting of EU finance ministers in Malta on Friday. Greek prime minister Alexis Tsipras has called for an emergency summit of EU leaders if a deal is not struck by the end of the week.

But while Greece tussles over the reforms required to unlock the next tranche of bailout aid, its economy is sliding back towards recession, making the need for funding all the more urgent. The charts below give a measure of Greece’s economic health to date.

Forecasts revised down

In December, Greece looked set for a strong recovery, with the country’s central bank and the International Monetary Fund both forecasting the economy would grow by at least 2.5 per cent in 2017. Their projections were markedly more optimistic than those of a consensus of leading international economists.

But a return to contraction in the fourth quarter of last year along with Athens’ failure to complete the latest bailout process within 2016, as Mr Tsipras had promised, brought a downward revision. The central bank last month cut its growth projection for 2017 to 1.5 per cent.


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