A new world report by Swiss consulting company Prognos AG foresees a hampered Greek economy into the next decade, according to German newspaper Die Welt that published the results.
The report predicts that Greece’s economy will keep shrinking by 0.8% each year until the early 2020’s. Only around this time will the country be able to begin maintaining a steady 2% growth rate. Overall, Greece, having lost almost 25% of its economy since 2008, will manage to restore pre-crisis levels of GDP after 2034.
The company’s forecast is strikingly different from that made by the International Monetary Fund in early October 2015. The IMF had predicted that Greece will achieve a 2.7% growth rate in 2017, following a recession in 2015 and the first part of 2016.
“The fiscal projections for 2015 and the medium term are IMF staff estimates based on the fiscal package included in the European Stability Mechanism program agreed on between Greece and its European partners and on information available as of August,” the IMF’s report had noted.
This long-term recession will be accompanied by high unemployment rates, Prognos predicts. In the latest data provided by Eurostat, Greek unemployment rates remained at 25% while unemployment among youth was 48%. Prognos believes that the unemployment rates in Greece will drop to 10% only in 25 years.
Greece’s current Debt to GDP ratio stands at 177%. The country’s debt ratio was 108.9% in 2008 and the report does not see the acceleration that has begun since slowing down anytime soon. Prrognos believes that in 2022 Greece’s Debt to GDP ratio will reach 245%.
This continuous increase of the debt’s share in the economy has brought discussions about a potential debt relief to the forefront. Creditors have agreed to open talks about such a relief following the completion of the first review of Greece’s 86 billion euro bailout deal.
The report does not see Greece coping without a debt haircut. However, the chances of this happening are bleak as the German government has rejected this route. On the other hand, the IMF has pushed for Greece’s debt to be slashed since this past July. European creditors’ unwillingness to adopt this policy is part of the reason why the IMF has yet to officially participate in the new Greek bailout.
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