What the International Monetary Fund (IMF) predicts for the Greek economy through its report released today is 2% in 2018 growth compared to a previous forecast for 2.6% and a fall in unemployment to 19.8% this year (from 20.7%). It is worth noting that for 2019, it predicts growth of 1.8% and a 18% unemployment fall.
More precisely, in the IMF’s World Economic Outlook report released today as part of the beginning of the IMF and World Bank Spring Summit in Washington, a 2% growth rate is mentioned for 2018, a decline in unemployment and a healthy external balance.
The Fund’s report presented by Chief Economist, Maurice Obstfeld, reads that Greece grew by 1.4% in 2017, raising its long-term growth bar (2023) to 1.9%, almost double the previous estimate (in October 2017 it estimated a 1% growth of the GDP for 2021). This is a particularly important development in view of the fact that one of the key disagreements between Europe and the Fund was the long-term growth prospects of the (Greek) economy, which played a crucial role in the debt sustainability analysis. At the same time, the IMF predicts a faster decline in unemployment than its estimates six months ago.
Decrease in unemployment to 19.8%
The report records the revision of unemployment data, as the IMF predicts a faster de-escalation than it had foreseen last October. According to the report, in 2017 unemployment fell by 0.8% more than the initial projections, as it stands at 21.5% and not at 22.3% that was the first estimate. For the current year, the Fund places the unemployment rate at 19.8% against the estimate of 20.7%. Finally, for 2019, the IMF predicts an even greater fall in unemployment, estimated at 18%.
Growth of 2% in 2018 compared with a previous forecast of 2.6%
The Fund is revising its growth forecasts as it estimates that Greek economy grew by 1.4% in 2017, when it predicted growth of 1.8% in October. In addition, a 0.6% deviation for the year 2018 is recorded, after the IMF revised its 2.6% estimate for the first half of the year, and now places growth at 2%. For 2019, it predicts a decline in growth as compared to 2018 as it finds it at 1.8%.
The IMF has included these growth forecasts in all its analyses since 2015 to date on the sustainability of Greek debt. For its part, the European Commission appears more optimistic and estimates that Greece will grow by 2.5% in 2019. This deviation is important because it shows that the Fund and the European side do not take the same figures into account in debating the decline of the debt.
News on the primary surplus to become known on Wednesday
The IMF’s latest forecast on the primary surpluses and the debt are expected to be released tomorrow. In its latest report last October, the Fund had said that this year, the primary surplus will be around 2.2% of the GDP against a target of 3.5% and subject to pre-defined measures and counter-measures for pension cuts and as foreseen in the ESM programme, would confirm the targets of the surplus for the 2019-20 two-year period at 3.5% of the GDP…. / IBNA