Bank of Greece (BoG) Gov. Yannis Stournaras called Greece’s fiscal adjustment over recent years as “unprecedented”, speaking on Thursday during a Euro-Arab summit in the Greek capital.
Stournaras, a former finance minister in the previous government coalition before leftist SYRIZA assumed power in January 2015, also cited mistakes and delays in implementing the fiscal “about face”, which reversed years of chronic budget deficits with memorandum-mandated primary budget surpluses.
The same period, of course, witnessed the Greek economy contract by one quarter, while unemployment increased and incomes shrank.
Despite recent urging by Parliament’s General Budget Office, among others, for restraint in overly optimistic figures for 2017, Stournaras continued to maintain that the Greek economy will post marginal GDP growth in H2 2016, and return to annual and robust growth – by Greek standards – in 2017 and 2018.
He repeated the BoG’s prediction of 0.3-percent GDP growth in the second half of 2016; 2.5 percent for 2017 and 3 percent for 2018, respectively. His caveat, as in previous such comments, is that the forecasts depend on the unobstructed implementation of the program, the timely disbursements of bailout loan tranches and a supportive monetary policy by the ECB.
Nevertheless, he also warned that risks remain for the Greek economy’s prospects. For instance, he said delays in implemented reforms and privatizations foreseen in the program could undermine credibility, increase uncertainty and inhibit economic activity.
