All eyes on upcoming quarterly Greek GDP figures as 2017 begins with 'hiccups', impasse over 2nd review

Concerns that forecasts of GDP growth in the crisis-battered Greek economy are at risk have emerged even before the end of the first quarter of 2017, as the year figures prominently in Athens' and creditors' narrative of a solid economic recovery in the country.

The highest forecast, in fact, one shared by the leftist Greek government and most European institutions, is 2.7 percent GDP growth in 2017. In absolute terms that means an increase by 4.7 billion euros in current values.

Nevertheless, the first "shadows" have emerged over the economy's performance in the first quarter of the year, given that widespread uncertainty again plagues the Greek economy because of delays in concluding the second review of the Greek program (second bailout). The delays, in turn, are the direct result of a failure between the Tsipras government and institutional creditors (Commission, ECB, SSM and a non-lending IMF) to close-out negotiations over a series of issues, or demands, pressed by the latter.

The year began with a significant widening in the balance of trade deficit and an acceleration in the outflows of deposits from Greek banks. An increase in the value of non-performing loans (NPLs), after a second half 2016 improvement, in tandem with  negative trends in primary indexes, such as PMI, dampened economic "momentum" was carried over from 2016 -- which itself was characterized by an unprecedented direct and indirect "tax tsunami" unleashed by the government on taxpayers, consumers and businesses.

The most crucial number for the upcoming period are quarterly GDP figures for Q1 2017, as the previous quarter in Q4 2016, drop the annualized rate slip by 1.1 percent, over Q3 2016.

With successive "unofficial deadlines" for a conclusion of the review having gone by the wayside over the previous year, the new "unofficial deadline" has been extended to April or even May, although some top government officials in Athens - including Greek PM Alexis Tsipras - again cited a March 20 Eurogroup meeting as a realistic target for a staff-level agreement.

With a couple of days remaining before the "Ides of March", open issues on the negotiating table between the Greek side and creditors in order to conclude a staff-level agreement include:  

• A deal over "countervailing measures" worth 2 percent of GDP after 2018, something that the embattled Greek government has insisted on  
• Creditors' demand for the ratification of austerity measures, by Greek Parliament, to take effect before and after 2018
• A delineation of primary budget surplus targets after 2019, with European creditors pushing for high fiscal thresholds (3.5 percent of GDP) for a "medium term", and with Greece and the IMF charging that the targets are too ambitious
• Spelling out medium-term Greek debt relief measures, again an issue that has seen European creditors and the IMF disagree
• IMF approval of a readjustment package after the current bailout ends, and finally,
• The re-inclusion of Greek bonds in the ECB's Quantitative Easing stimulus program, a much-coveted goal of the current Greek government in order to breathe liquidity back to the country's "asphyxiated" banking system.