The Organization for Economic Cooperation and Development (OECD) appears optimistic about the course of the Greek economy, maintaining its projections for the growth rate of the Greek GDP in the “region” of 2%. The recovery of the Greek economy is expected to maintain its momentum, with the country’s GDP growing at a rate of 2% or slightly higher in 2019 and 2020 compared to an increase of 1.9% in 2018, according to the six-monthly report, OECD Economic Outlook. The report shows that the Organization for Economic Co-operation and Development estimates a growth rate of 2.1% this year and 2% in 2020. “Domestic demand will contribute more to growth than in the recent past, offsetting the containment of increase in the exports”, the OECD notes, adding: “Investments are expected to start recovering, as financial conditions improve.”
Increase of consumption
“Higher household incomes, due to the recent increase in the minimum wage and the increase in employment opportunities, will support their increased consumption. The primary budget surplus continues to exceed the medium-term targets, the access to international bond markets is improving and the budgetary ‘cushion’ is substantial.”
At the same time, the report stresses that ensuring fiscal credibility requires the continuation of achievement of medium-term budgetary targets. “Continuing progress in reducing banks’ high exposures to non-performing loans will require more profound measures. Additional reforms are needed to boost productivity and investment, improve the business environment and increase skills,” it adds.
The OECD refers to the increase of the minimum wage by 11%, to 650 euros per month, and to the abolition of the sub-minimum wage for young people this February, noting that with these increases, the minimum wage in Greece in relation to the average wage is approaching the average wage of the countries of the Organization. “This increase will reduce workers’ poverty, but it is likely to contribute to atypical work and slowing of profits in the number of jobs available, due to poor productivity,” it is mentioned.
Concerning budgets, the report states that the primary budget surplus was 4.2% of GDP in 2018. The strong revenue- such as those of VAT from the spending of tourists- and the lower than planned public investments contributed to the surplus, it notes./ibna