Will the Greek economy ever come back to growth?

Alexis Tsipras at the informal meeting of the Heads of State on the refugee crisis (TVNewsroom European Council, 23/09/2015)

Alexis Tsipras at the informal meeting of the Heads of State on the refugee crisis (TVNewsroom European Council, 23/09/2015)

Eurozone’s Finance Ministers convened in Luxemburg two days ago and proposed that Greece should immediately focus on the necessary reforms in order to be able to cope with the third bailout programme.

Both sides (creditors and Greece) agreed that Greece will have to implement the 48 prerequisites- measures that will unlock the next much needed tranche of 3 billion euros.

The aforementioned measures are included in the 2016 draft budget that was presented by the Greek government and show that the economy will shrink even more during 2015 and 2016 and will come back to growth no later than 2017.

However, the International Monetary Fund (IMF) warns at its World Economic Outlook report that there are still chances of market turbulences in case a Greek political uncertainty returns despite the fact that the dangers have been reduced due to the agreement and the new bailout programme. It is also noted that the consequences of an upcoming market unrest are possible to be transmitted to the rest of Europe.

It remains to be seen though whether the implementation of these measures will actually lead to growth and boost the Greek economy or the Greeks will become once again “subjects” of their creditors’ natural experiments.

Eurogroup keeps on demanding reforms

Once again the 19 Finance Ministers of Eurozone gathered to discuss Greece’s bailout programme and upcoming measures. The outcome of the meeting was, as in the past ones, a mutual understanding that Greece has to start working on the implementation of structural reforms in order to be financed by the EU creditors.

More specifically, the president of Eurogroup and Dutch Finance Minister  Jeroen Dijssebloem stressed: “A lot of work has to be done, a number of reforms still have to be implemented and new reforms have to be designed. It’s in the Greek interest to deliver as quickly as possible so we can also continue on the process of bank recapitalisation and go into the debate about debt restructuring.”

The Greek government is betting on this debt restructuring in order to make its debt viable; a debt which is currently at 187,6% of GDP. The EU creditors seem to be ready to undertake such action and bring the IMF back to participate in Greece’s programme. The latter was also underscored by Michel Sapin, the French Finance Minister, who mentioned that: “It’s crucial because the IMF is on a different timetable and the IMF can only put its next program in place when we have agreed to easing the debt burden”.

Will Greece’s tough draft budget bring growth?

It was last Monday when the Greek Prime Minister submitted to the parliament the draft budget for 2016; a year with lots of tax increases and spending cuts to come.  According to the budget, it is anticipated that the economy is going to be contracted by 2.3% in 2015 and 1.3% in 2016 which is in accordance to the creditor’s estimates.  The government is also supposed to receive 4.3 billion euros through the implementation of mainly tax-based measures.

The IMF’s report supports the aforementioned figures regarding the Greek economy’s growth and underlines the impact of a potential future political unrest on the country’s economy and to the rest EU member states in case the necessary reforms are not put into action.

But these measures are going to bring growth not before 2017. The Greek citizens are undertaking this long-lasting crisis for more than 5 years now and it seems that it would take several more years till the revival of the economy.

All the previous bailout programmes for Greece have failed to bring growth. The reasons are twofold. Either the Greek governments are incompetent to materialize the necessary reforms and implement the right measures or the measures proposed by the creditors are problematic and cannot bring the desired results. Whatever the reason the outcome remains the same. No growth for Greece.

The first review: Well begun is half done

The first review of whether Greece is in line with the programme is most likely going to take place at the end of October. The Greek government has little time to vote for the measures that have been agreed with the creditors and start implementing immediately fundamental reforms.

However, the leader of the governing left-wing Syriza party is aware of the fact that the first review will be very crucial which will lead not only to the recapitalization of the Greek banks but also to debt restructuring. More in detail, Alexis Tsipras mentioned during his speech in the parliament two days ago: “We are aware that the successful conclusion of the first review is the key that will open the door for the necessary debt restructuring.”

All in all, the Greek government seems to be ready to finally listen to its creditors and implement the necessary measures but we must wait and see whether this is going to last and most of all whether the measures will have the desired positive impact on the economy.

Follow Chris on Twitter @CAnyfantis

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Featured Stings

Where is heading Putin’s Russia?

Let your fingers do the walking

While EU Open Days 2013 discuss the 2020 strategy, Microsoft shares a glimpse of EU 2060

Post-Brexit muddled times: the resignation of UK’s top ambassador and Theresa May’s vague plans

GradList Launched At TheNextWeb 2014

COP21 Breaking News_03 December: Argentina Accepts KP Amendment

Europe turns out more jobs this summer

China’s 13th Five Year Plan and the opportunities for Europe

LEAGUE OF YOUNG VOTERS LAUNCHES TOOL FOR YOUNG PEOPLE TO COMPARE POLITICAL PARTIES AHEAD OF EU ELECTIONS

European Youth Capital 2018 : Cascais

EU Council: Private web data to be protected by…abusers

Unemployment and stagnation can tear Eurozone apart if austere policies persist

World Summit Awards 2016: Sustainable impact through digital innovation

European Youth Forum demands immediate action & binding agreement on climate change

EU Council agrees to reform the system for motor vehicles but with “restricted” power for the Commission

Gloomy new statistics signify no end to Eurozone’s economic misery

Greece bailout programme: Full agreement after marathon negotiations on debt relief between IMF and Eurozone

SCADA Security Conference 2017 in Prague, Czech Republic

Huawei answers allegations about its selling prices

Is the advent of nationalism to destroy economic neo-liberalism?

Greece: Tsipras’ referendum victory does not solve the financial stalemate of the country and its banks

An expert in the South China Sea issue on an exclusive interview at the European Sting

Brexit Update: EU endorses unprecedented compromise to help Cameron out of the referendum mess he got himself into

Google strongly rejects EU antitrust charges and now gets ready for the worst to come

European Union: More taxes out of less income

ECB’s trillion has to be printed and distributed fast before Armageddon comes

Eurozone: Statistics don’t tell the whole story

Why capital markets have no more reservetions about Eurozone

MWC 2016 LIVE: Orange targets VoLTE and Voice over Wi-Fi; strikes Google partnership

“We are in Europe, but not of it”, from Churchill to Cameron: British Exceptionalism now threatens the entire EU Edifice

Draghi’s top new year resolution: Quantitative Easing

G20 LIVE: “ISIL is the face of evil; our goal is to degrade and ultimately destroy this barbaric terrorist organisation”, US President Barack Obama cries out from Antalya Turkey

How wealthy people transmit this advantage to their children and grand children

Entrepreneurial leadership: what does it take to become a leader?

Trump asked Merkel to pay NATO arrears and cut down exports ignoring the EU

Tackling Youth Unemployment

Impacting society with digital ingenuity – World Summit Award proclaiming the top 8 worldwide

Brexiteer May gets lip-service from Trump and Turkish promises from Erdogan

MWC 2016 LIVE: Ingenu steps up efforts to build LPWA networks across the globe

Economic recovery won’t tackle youth unemployment problem

On Grexit: Incompetence just launched the historic Ultimatum that could open “pandora’s box”

EU takes again positive action on migration crisis while Turkey asks for dear favors in exchange for cooperation

EU Trust Fund for Africa: Can it be beneficial for Italy and tackle the migration crisis in the Mediterranean?

Refugee crisis update: EU fails to relocate immigrants from Greece and Italy

May a parody constitute a copyright infringement? European Court of Justice to give the answer

Germany loves a strong euro; the new Fiscal Councils can deliver despite the Greek chaos and a wider questioning of austerity

The EU checks the multinationals for tax fraud but Britain may sail out of the EU via Panama

The ECB tells Berlin that a Germanic Eurozone is unacceptable and doesn’t work

Alexis Tsipras ready to test Eurozone’s political sturdiness; Up to what point?

EU’s tougher privacy rules: WhatsApp and Facebook set to be soon aligned with telcos

Last-chance Commission: Why Juncker promised investments of €300 billion?

MWC 2016 LIVE: Under Armour learns from “robust community of data”

Alexandre in Czech Republic

“Two Pack” approved: Is democracy chased away from Brussels?

MWC 2016 LIVE: BT chief aims to be at UK 5G forefront

EU seeks foreign support on 5G from Mobile World Congress 2015 as the “digital gold rush” begins

Latest leaked TTIP document confirms EU sovereignty may be under threat

VW diesel scandal and climate change: can increased independent car checks lead to cleaner mobility?

South Eurozone countries threatened by rising borrowing cost and expensive euro

Has the EU economy truly revived from the financial crisis?

More Stings?

Comments

  1. What else? says:

    “All the previous bailout programmes for Greece have failed to bring growth..”

    Does anyone believe that these programmes were designed to bring growth?

    They were vindictive punitive plans to bring apocalypse.

Trackbacks

  1. […] Will the Greek economy ever come back to growth? – The European … […]

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

w

Connecting to %s