The Organization for Economic Co-operation and Development (OECD) has predicted that the Greek economy will recover in the second half of 2016 and expects a 1.9% growth rate for 2017, in is latest economic forecast.
According to the OECD, a return to growth will come after a deep and prolonged recession, as recovering confidence boosts investment and consumption and improved competitiveness raises exports. Unemployment is still very high, which is causing serious social problems, but is now gradually receding. The huge public debt burden is undermining investment and confidence, making some form of additional debt relief (for example, extending maturities) crucial.
The pace of fiscal consolidation has slowed. This is appropriate given the need for growth and rising fiscal pressures, including from the refugee crisis. The implementation of policies such as the Guaranteed Minimum Income and school meal and housing programmes will reduce poverty and inequality, which rose sharply during the crisis. Fighting tax evasion would increase fairness and raise the revenues needed to deal with social problems. Dealing with the large stock of non-performing loans in banks is a priority to restore the availability of credit for investment.
Persistently weak productivity performance accounts for a significant part of the decline in output since the onset of the crisis. The full implementation of structural reforms will boost productivity and growth. Labour market reforms have improved flexibility and thereby productivity. Productivity growth will also be boosted by easing the regulatory burden and barriers to competition further, especially in network industries and protected professions, and increasing the efficiency of bankruptcy procedures.