World Economy

Greece Forecasts Growth of 2.7% in 2017

The Greek ParliamentThe Greek Parliament

After more than half a decade of grueling, austerity-driven recession, Greece has forecast economic growth in 2017, in what would be its first annual rebound in seven years.

Europe’s most indebted country will see growth of 2.7% next year partly as a result of an upsurge in tourism, according to the draft budget that Athens’s leftist-led coalition submitted in parliament Monday evening, EU News reported.

 “We are at a turning point at which we can say, with certainty, that we are leaving the recession behind us,” the national economy minister, Giorgos Stathakis, said last week.

The blueprint, which officials hope will form the basis of talks when lenders begin a second review of the economy later this month, is expected to highlight better-than-expected tax revenues and renewed interest in investments under the country’s privatization program.

Insiders said Greece would easily meet its bailout goal of achieving a surplus–excluding debt-servicing costs–of 0.5% GDP this year. Its draft budget is projecting a 1.75% surplus for next year in line with last summer’s €86 billion ($96.64 billion) rescue program.

But private-sector economists derided the optimism as yet another attempt by a Greek government to project a narrative of success.

Greece’s economy, said Theodore Pelagidis, a senior fellow at the Washington-based Brookings Institution, “is trapped in an unfortunate no-reforms, no-growth, lack-of-demand equilibrium.” Outside official circles, most are persuaded that next year’s growth will not surpass 0.6%.

Similar skepticism has been expressed by international lenders who have poured more than €300 billion into Greece since its near economic collapse in late 2009.

The International Monetary Fund, which believes true economic recovery is only possible when the country’s staggering debt pile is forgiven, says while Athens has accomplished impressive fiscal consolidation, slashing primary and current account deficits, growth remains elusive.

Since the onset of the crisis, Greece has been thrown into a depression-era decline with the loss of a quarter of its national output and unemployment peaking at 28%.

In a mission statement citing the findings of an official staff visit last month, the organization said it expected joblessness–now down to 23%–to stay in the double digits until the middle of the century.

“Looking forward, growth prospects remain weak and subject to high downside risks,” it said.

Prime Minister Alexis Tsipras, whose own popularity has plummeted with the embrace of belt-tightening in return for last summer’s lifeline, has based his political fortunes on attaining debt relief by year’s end.

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