OECD: Greek economy stabilized in 2016; 1.1% GDP growth in 2017, 2.5% in 2018

The Organisation for Economic Co-operation and Development (OECD) on Wednesday projected growth in recession-plagued Greece to reach a very modest 1.1 percent in 2017, but jumping to 2.5 percent next year.

The forecasts were included in the OECD’s forecast summary (June 2017).

After a prolonged period economic implosion, three bailouts by institutional creditors and even flirting with “Grexit” in 2015 – the ‘annus horribilis’ of the crisis years – OECD said the country’s economy finally stabilized in 2016.

The report by the international organization, as pertaining to Greece, stated:

“The labour market is improving, supporting private consumption, and higher demand from abroad is boosting exports. Investment has started to recover from very low levels and should gather pace. The consumption tax increase in early 2017 and recent energy price increases will raise consumer price inflation, even though core inflation will remain moderate, as ample spare capacity persists.

In 2016, the primary budget surplus was 3.8% of GDP, exceeding expectations and the 0.5% target. Further progress in combatting tax evasion, broadening the personal income tax base and controlling pension spending are key to cementing the significant fiscal achievements of recent years, while freeing up resources for much needed social assistance programmes. Public debt has stabilised but remains very high, aggravating economic vulnerabilities and calling for additional debt relief to ensure medium to long-term fiscal sustainability.

Continuing the implementation of structural reforms would increase productivity and, through intensified participation in global value chains, exports. Developing and implementing effective job-search and training policies, linked to unemployment benefits, and enhancing life-long learning would strengthen workers' skills, accelerate the shift towards tradable sectors and improve people’s prospects of getting good jobs.”