New IMF Forecasts Adopt Pessimistic Scenario for Growth After 2021



The International Monetary Fund (IMF) published its most recent ”World Economic Outlook” on Friday.

The new forecast of the Fund sends mixed signals about Greece’s prospects, revising upward some short-term indexes while smashing the government’s hopes for sustainable and strong growth rates in the next few years to come.

More specifically, the IMF is revising its previous forecast for Greece’s growth in a positive direction for 2020, aligning with the more favorable estimates made by Athens and Brussels earlier this year.

The Fund believes that Greece will achieve 2.3-percent growth in 2020, 0.1% higher than previously thought. However, the growth rates predicted for the years ahead are completely different from what Athens has repeatedly predicted them to be.

Even the new, revised rate for 2020 is lower than the 2.8 percent Athens and Brussels believe the country will achieve.

Additionally, the IMF forecasts a growth rate of 1.4 percent for 2021 and just 0.9 percent between 2023 and 2024.

The same, ”mixed-signals approach” applies to the issue of the Greek primary surpluses as well.

Just a few months earlier, the IMF had stated that Greece’s primary surplus of 2019 would not exceed 3.3 percent of the GDP, falling short of the 3.5-percent target.

However, today’s report suggests that Greece will actually record a primary surplus of 3.7 percent, exceeding the targets set despite the numerous tax cuts and handouts introduced during the year by the previous, and current, government.

Nonetheless, the Fund believes that the primary surplus for 2020 will not exceed 3.1 percent, lower than the 3.5 percent Athens is obliged to achieve.

The Fund also noted that Greece should remain along its well-laid out path of reforms. However, it warned that the country still faces structural issues, including a declining population, an historic mentality of tax avoidance, and a population that is already overburdened with debt.

On a positive note, the Fund estimates that Greece’s public debt will continue to decline and suggests that the government should adopt a mixture of fiscal policies which combine boosting growth with existing social programs.