Greece Sees Milder Recession in 2016
World Economy

Greece Sees Milder Recession in 2016

Greece’s government said it expected the economy to flat-line this year and shrink less than previously forecast in 2016, as it finalized a budget likely to heap more austerity on a long-suffering public.
The program, released a day after parliament approved reforms demanded by Greece’s creditors in exchange for fresh bailout funds, forecast zero growth for 2015 rather than minus 2.3% and cut the predicted contraction for 2016 to 0.7% from 1.3%, Reuters reported.
The budget maintained a primary surplus target–excluding debt servicing–for next year of 0.5% of gross domestic product, which Athens says will allow it to press ahead with a social program.
But it pegged social welfare at just €100 million ($106.5 million), while outlining €5.7 billion of spending cuts including €1.8 billion from pensions and €500 million from defense.
Privatization revenues will also be lower than hoped, according to the plan.
The leftist-led government of Prime Minister Alexis Tsipras is under increasing pressure to deliver tangible benefits to a bailout-weary public in exchange for having signed the country up to a third rescue package in July.
His parliamentary majority shrank to just three seats on Thursday, after two dissenting lawmakers were expelled for not backing the bailout bill, including regulation on home foreclosures.
He was reelected in September on promises to implement the terms of a bailout of up to €86 billion while mitigating its harshest consequences.
“We are submitting the budget amid adverse economic conditions but the prospects are very positive,” the finance ministry said. “The 2016 budget is a small but important step for the implementation of government policy in coming years.”
With the impact of capital controls imposed in June to stem a deposit outflow milder than expected, economists say the government’s improved GDP forecast for 2016 is realistic.
But with many seeing a recession of around 0.5-0.6% this year, the 2015 revision looked optimistic.
Tsipras’ priorities are to successfully conclude the first review of the new bailout and the recapitalization of Greece’s ailing banks, so that he can then start talks with its lenders on debt relief.
Greece also wants to complete a series of privatizations to help it cut a debt seen rising to 187.8% of GDP next year from 180.2% in 2015.
It is aiming for privatization revenues of €1.9 billion in 2016, the budget plan said, lower than the €3.7 billion target in the bailout.
Athens expects to tap bond markets after the second half of 2016.


Short URL : http://goo.gl/AgDuXw
  1. http://goo.gl/e4oHkd
  • http://goo.gl/ILvNe4
  • http://goo.gl/9MPhmt
  • http://goo.gl/ALCgDO
  • http://goo.gl/uiTmbp

You can also read ...

Trump Tactics Sabotaging US Economy, Markets
Wall Street could be making a costly mistake. According to...
File photo of finance ministers and central bankers from the G20 nations.
Global economic growth is poised to pick up this year, though...
Capital Economics forecasts Turkey’s GDP growth will fall to 3.5% in 2018 from 7.4% in 2017.
Expectations for Turkey's end-2018 inflation rate rose from 12...
Moody’s Warns Philippines of Downside Risk
Debt watcher Moody’s Investors Service on Friday said the...
Apple Watch Smells Losses
The latest round of US tariffs on $200 billion of Chinese...
Italian Bonds, Stocks Fall
Italian bond yields rose and equities sold off on Friday after...
Technology Can Help Workers From the Informality Trap
Technology and what it will do to change how people work is...
A weaker yuan remains a source of risk for global currency markets.
The Chinese yuan slid to its lowest in more than a year on...