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BoG chief: Greek economy expected to start recovering in 2014

The Greek economy is expected to shrink by 4.6 pct this year, while unemployment will stabilize at 28 pct, the Bank of Greece said in its annual report on monetary policy.

The report was submited to Parliament on Wednesday by the Bank of Greece's governor George Provopoulos.

The report said that the Greek economy has entered a balancing course and was expected to begin recovering in 2014, while unemployment was expected to begin falling in 2015. The inflation rate will be negative this year (-0.3 pct), while the economy will recover more than its lost competitiveness in the period 2009-2011.

The central bank stressed, however, that a precondition for economic recovery was the implementation of necessary reforms and a continuation of implementing a stabilization programe without any relaxation of deviation. The report noted that risks and uncertainties still remained that could undermine the outlook of economic recovery in the country.

The report noted that despite progress made in several sectors, the state's function remained weak, creating problems in the implementation of approved measures, while a long in duration and intensity recession, combined with a lack of liquidity could raise business closures in the market.

The Bank of Greece said the climate was the right one for the government to proceed more rapidly in the implementation of a privatization programe, based on the job positions to be created.

Provopoulos recommended enhancing active policies in the labor market and underlined the need to strictly adhere to an adjustment programe and to achieving a primary budget surplus this year. However, he noted that achieving fiscal goals should be combined with a tax relief of taxpayers.

The central banker noted that a strengthening of the banking sector will be crucial to restoring liquidity in the market and said that Greek banks will face new challenges as they successfull complete their recapitalization process. First, credit institutions must be prepared for a new round of stress tests to be conducted by the of 2013 by the Bank of Greece and secondly, emphasizing on a more efficient management of bank loans in delay.

Source: Athens News Agency

Last Updated Wednesday, 29 May 2013
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