Greece Could Return to Sustainable Growth

Greece could be close to returning to sustainable economic growth at last after almost a decade of devastating recessions and crises, economists believe.

The country’s government is getting closer to restoring a degree of financial stability through the latest round of talks with the EU and the International Monetary Fund. After several false dawns, UBS bank’s chief economist for the region hopes that only a few more steps could be required to put the troubled economy firmly on the right track, Yahoo reported.

Gyorgy Kovacs believes that finalizing the debt relief plan combined with Greece’s inclusion in the European Central Bank’s bond-buying program would be one serious improvement, and that further improvements in economic sentiment, with the liberalization of capital controls, is another.

“What we have seen is that, compared to the first quarter, there has been a positive turn in the economy. If we add on top of that the closure of the review, hopefully it will bring improved confidence into Greece,” he said. “Hopefully it will allow the end of capital controls, or the easing of those.”

Fewer capital controls should give companies and individuals a greater incentive to put money into the country and its banks, as they would be free to remove it at will.

Kovacs also hopes that the repayment of arrears by the government to the private sector should boost confidence and investment further. “The more significant fiscal consolidation is to a certain extent behind us, which suggests we should see some economic recovery this year,” he said. “The tourism season is looking at good indications, so yes I think it is going to happen.”

“The big question is how big the recovery in investment spending could be—it would be the signal for a more sustained recovery.”