The Foundation for Economic and Industrial Research (IOBE) reported on Wednesday that the Greek economy should grow by 0.7% this year but the increasing unemployment rate is likely to drop less than originally estimated.
IOBE, Greece’s leading economic think tank, had earlier predicted a small growth for this year, without setting a forecast. Its GDP growth prediction is broadly in accordance with the European Union (EU) and International Monetary Fund (IMF) estimate of 0.6%.
The recession has led unemployment to record highs, leaving almost three times as many Greeks jobless as in 2008 when the financial crisis broke out.
IOBE, which expected the unemployment drop to drop to 26% this year, stated that it will eventually reach 26.7%, due to a wave of public sector layoffs demanded by the country’s international lenders. Unemployment reached 27.8% in the first quarter of 2014.
IOBE expects household consumption to increase by 1% and has noted that revenues from tourism will amount to 13 billion euros. However the EU and the IMF estimate that private consumption will drop by 1.8% this year.
It was also announced that IOBE expects the results of European Central Bank (ECB) stress tests later this year to show that the capital needs of the country’s top four banks were small or close to zero.
Greece’s four biggest banks, Eurobank, Alpha Bank, Piraeus Bank and National Bank, control about 90% of the sector. They have already been through two rounds of recapitalization after two stress tests by the country’s central bank.
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