IOBE: Greek economy to sink back to recession

IOBE: Greek economy to sink back to recession

Athens, July 24, 2015/ Independent Balkan News Agency

By Spiros Sideris

Foundation for Economic and Industrial Research (IOBE) foresees a recession between 2-2.5% in 2015 in its quarterly report on the Greek economy.

Moreover, it foresees a comeback of recession in the Greek economy in 2015, as a result of the restrictions on capital movements and new fiscal measures.

According to the Director General of the Foundation, Professor Nikos Vettas, the publication of the quarterly report of the Foundation finds the Greek economy severely injured.

In the difficult to reverse effects of recent events is included the gradual lifting of restrictions on banking transactions, the broad loss of confidence and the reduction of incomes and employment, with sharp drop of investments.

According to him decisive moves are needed in economic policy without delay, to restore confidence and balance in the banking system.

Conditions for a return to growth earlier than expected and the return to the markets before the end of the program are:

– The irrevocable, non-negotiable positioning of the large majority of the political spectrum on the country’s stay in the eurozone.

– Urgent and effective shift towards attracting investments.

– Implementation in practice of the new programme in the most efficient way.

Given the above, and after further significant recovery of confidence, the Greek side will not only be entitled but also be obliged to demand from its partners and creditors gradual but significant moves for the further prolongation of loans and reduction of rates.

On his part, the president of the Foundation Takis Athanasopoulos stressed that “the three months since the presentation of the first quarterly report last April was for our country, both for its economy and its international image, more critical than any other moment of our post-dictatorship period”.

According to Athanasopoulos, “unlike the other three countries (Portugal, Ireland and Cyprus), our country not only failed to overcome the crisis, but it seems that the crisis deepens. In the current environment it is absolutely necessary to stabilize the economy and the banking system.

The removal of uncertainty through the completion of the agreement reaffirms the European perspective of the country, is a precondition for the normalization of conditions that will allow banks and businesses to return to a state of normality”.

As the president of the Foundation added, “our sole objective from here on, to effectively address the problem, should be to eliminate this contradiction. Our choices may not be straightforward, but they are clear.

If we want to have high living standards, we must make radical reforms in all aspects of our economic and social life, no matter how hard it may be in the short term, which will ensure a better future not only for us, but especially for our children.

On the other hand, our refusal to carry out the necessary reforms means that we choose a low standard of living either inside or outside the euro, even in the case the total debt relief”.

Regarding the forecasts of 2015, as it was mentioned there will be a decline in private consumption in the second half and in the year as a whole, stabilisation or slight increase in public consumption, sluggish investment activity since mid-2014, a drop in exports and import demand, further increase in unemployment , halting deflation in July and an increase in prices​​ across the year.