This year, the Greek economy is in recession caused by the global economic crisis. As warned on Thursday the International Monetary Fund (IMF, International Monetary Fund, IMF), the country has a long waiting period anemicznego growth, if not Greek government will carry out structural reforms and the state does not correct the fiscal imbalance.
IMF forecasts that the Greek economy, accounting for about 2.5 percent of the euro area economy, will shrink in the year by 1.7 percent, while the unemployment rate will rise to the level of 9.5 percent.
“Greece can not avert during the fiscal consolidation. Given the weak political government facilities, the process of adjustment in the sector of public finances needs to be realistic. The government must demonstrate a determination to repair the balance of the progressive tax, “the experts evaluate the International Monetary Fund.
“Structural reforms are absolutely necessary in order to improve the competitiveness of the economy and re-growth.”
IMF estimates that this year the budget deficit in Greece will rise to 5.9 percent of GDP, while last year it was 5 percent of GDP. This means a significant exceedance of the designated by the European Union limit of 3 percent. Government gross debt will rise to the level of 108.5 percent.
“Fiscal balance of central government is under pressure due to a decrease in budget revenues and additional expenses. The government is trying to compensate for these factors, through actions for fiscal consolidation, and efforts in the area of taxation. The level of debt is growing very quickly and it has a particularly high level, “assesses the IMF.
The Fund also pays attention to the fact that enormous fiscal and external imbalances make the Greek economy highly vulnerable to shocks and strongly emphasize the need to address the problem of loss of competitiveness. If the conditions on the global financial markets remain unfavorable, Greece, threatens the long period of slow economic growth.
“Countries in the euro area are part owners of a large external debt of Greece. If in this country have serious problems, foreign creditors of Greece will also have serious difficulties, “the IMF has estimated. Pokreślił Fund also stated that Greece External debt is currently about 147 percent of GDP, of which about two-thirds of the public debt.
The Directors of the International Monetary Fund stressed the need for structural reforms, particularly in public administration, state enterprises and in terms of labor markets and products.
The Fund also noted the need to intensify efforts to reform the pension system in the face of increasing costs due to aging.
Report of the International Monetary Fund mission to a large extent, repeated observations and comments from other international organizations, which also predict negative growth in 2009, for the first time since 1993. In recent years the Greek economy notowały rapid economic growth at a rate of 4 percent per year.
Conservative government of Greece continues to hope that Greece will avoid recession this year. Recent forecasts about the economic situation of the government that, in 2009 growth will be zero.
As is clear from the report, the Greek authorities based their forecasts on a more optimistic assumptions, under which the tourism sector to reach better results this season, and funded by the European Union infrastructure expenditure will be higher than the assumed IMF.
“International Monetary Fund sees a need for a more firm policy in order to raise investor confidence and avoid a surge in re-spreadów,” the IMF reported.
Spread between the Greek government bonds and German government bonds benczmarkowymi grew in February this year to a record high of 300 basis points. Unikający risk, investors would not buy the debt of countries with the periphery of the European Union. Since then, however, spread fell to around 120 basis points.