Euroviews. View: Greece’s economy strongly recovers for first time since 2010

View: Greece’s economy strongly recovers for first time since 2010
By Euronews
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The opinions expressed in this article are those of the author and do not represent in any way the editorial position of Euronews.

By Dimitris Papadimoulis is Vice President of the European Parliament, head of Syriza party delegation.


By Dimitris Papadimoulis is Vice President of the European Parliament, head of Syriza party delegation.

During the last couple of years the Greek economy has been moved from a state of prolonged crisis into a state of steady recovery. The revised growth figures of the European Commission for the 2016-18 period come to re-affirm the positive developments, as in 2017 the economy is expected to grow by 2.7% and in 2018 by 3.1%. In 2016, the economy grew by 0.3% for the first time since 2008, against the predictions of both the European Commission and the IMF for regression of -0.3% and -0.5% respectively.

Similarly for unemployment rates. Since the end of 2014, unemployment has been progressively falling, from 27% to 23.5% in the last quarter of 2016. This downward trend is expected to continue, and by the end of 2018, the European Commission predicts the figure to stand at 20%. Still, the numbers are extremely high, but comparing the massive surge between 2009 and 2014, there is significant improvement.

Steady signs of recovery, coupled with increasing growth rates, declining unemployment and the positive steps on tax collection mechanisms are a proof that things are changing. The primary surplus for 2016 exceeded the target of 0.5% of GDP, reaching 2% (i.e. which is 4 times higher), leaving room for the government to alleviate the pressure on low-income pensioners by providing the one-time relief package last December and to temporarily freeze a VAT increase in the Aegean islands where there are thousands of refugees and migrants.

On top of this, Greece has recently agreed to short-term debt relief measures that are about to significantly contribute in reducing gross-financing needs and make investors feel more comfortable. It is therefore important that economic and political stability are preserved and that Greece remains focused on track of reforms to successfully exit the fiscal adjustment program in mid-2018.

In this respect, it is vital to conclude the bailout review, pending since late 2016, and to reach a fair compromise. The IMF and the German Finance Minister Mr Schauble should both rely on their analysis and approach on the most recent evidence of fiscal performance, published by Eurostat and the European Commission, and the ability of the Greek economy to produce fiscal surpluses. It is urgent to address the fiscal and primary surpluses for the years after 2018 and to avoid excessive demands (i.e. new austerity cuts and primary surpluses at 3.5% for ten years) that will damage the progress that has been made and undermine mid and long-term sustainable growth, which is beneficial for both Greece and its creditors. The gap in fiscal estimates between the creditors should be reduced so that the economy can continue recovering and reforms can keep yielding results.

Furthermore, the Greek government is arguing in favour of a growth-friendly policy mix that will make possible a better GDP output in the coming years, securing tax compliance and combatting tax evasion. On that front, the use of cards in payments and the improvement of tax collection administration helped identify many cases of tax evasion. The policy mix suggested by the Greek side has been endorsed by the European Commission and the ESM with both institutions pressing for the conclusion of the bailout review.

Finally, it has to be noted that the controversy between the creditors over the Greek program has nothing to do with the performance of the economy and the efficiency of reforms. It is common sense that Greece is doing way better than expected and that the delay has strong political nuances. Amid electoral campaigns and competing interests in Europe, it is quite challenging to find a solution that will keep our European future united against populist, anti-European and extreme right political forces.

Dimitris Papadimoulis is Vice President of the European Parliament, head of Syriza party delegation.

The opinions expressed in this article do not represent the views of Euronews

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