According to an OECD report (Organization for Economic Cooperation and Development) published on Tuesday, the recession in Greece is predicted to continue in 2014. The economy will not recover before 2015.
OECD predicts recovery of the Greek economy in 2015, with a rate of 1.8%. As noted in the report, the development of the Greek economy is expected to return to positive levels from quarter to quarter during 2014.
This forecast is based on the premise that competitiveness, exports and investments will increase. However, the domestic demand will be reduced because of the continuing efforts for fiscal consolidation and the low bank balance sheets.
The negative aspect is that unemployment will remain high and so inflation will be kept in negative rates.
OECD advises however that fiscal consolidation should continue as planned due to the high level of debt. However, if growth proved less than expected, automatic stabilizers will be allowed to operate. The organization leaves the possibility open of a new debt reduction so that the sustainability of public finances is ensured.
The report estimates that the reforms already made regarding the markets will improve the price competitiveness and the redistribution of resources to activities with an international orientation, even if additional reforms are required.
Finally, a more efficient and fair tax system is a prerequisite for economic growth and social integration.
The organisation estimates that in 2013, the budget deficit will stand at 2.4% of GDP, in 2014, at 2.2% of GDP and in 2015 at 1.4% of GDP.