Greece’s economy is expected to hit rock bottom by the end of the year, the seventh of a deep recession but the effects could linger and create a small reduction after that, the Greek think tank IOBE said, in a more dire assessment of the potential for a recovery than the rosy estimates made by the government.
Prime Minister Antonis Samaras and Finance Minister Yannis Stournaras project the 183 billion euro ($248.47 billion) economy, which has shrunk by almost 25 percent, will pull out of the recession and grow by 0.6 percent this year.
“While a point of balance has been achieved without stronger investment and implementation of structural reforms, this could prove fragile at a fiscal and political level,” IOBE said in its quarterly report without providing detailed estimates.
IOBE, one of the country’s most respected economic think tanks was the home of Stournaras before he left to take on the tough job of overseeing continued austerity measures demanded by the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) that is putting up $325 billion in two bailouts that will run out this year.
While many analysts believe the country’s still staggering $430 billion debt, some 156.9 percent of GDP is unsustainable and can’t be repaid – and with the government mulling whether to ask for debt relief despite attaining a primary surplus – Samaras said he has the country on a path toward progress and is creating a “success story.”
Big pay cuts, tax hikes and slashed pensions have created a record 27.6 percent unemployment rate and deep poverty. IOBE said the rate would fall slightly, to 26 percent, thanks to a rise in exports and stronger investments activity although it’s still hovering over 60 percent for those under 25 as Samaras has yet to unveil a promised plan to put 75,000 young to work this month.