Last Update: 15:33
Bank of Greece revised sharply down its GDP estimates for 2017, with the economy seen expanding by 1.6% compared to earlier projections for 2.5% growth. “The weaker growth dynamics can be attributed to the long delay in completing the second review and to the consequent surge in uncertainty, which led to a considerable decline in investment. This, combined with the sharp increase in the tax burden, dampened the initial forecast,” BoG said in its monetary policy report.
This, combined with the sharp increase in the tax burden, dampened the initial forecast. Despite the downgrade, the medium-term growth outlook remains favourable, conditional on the continued smooth implementation of reforms. Meanwhile, the recovery is being favourably impacted by the positive economic and political developments in the EU.
The report states that the outlines given at the Eurogroup meeting of 15 June 2017 (deferral of EFSF interest and amortisation by between 0 and 15 years) could lead to the sustainability of public debt if the interest payments on EFSF loans were to be deferred by more than 8.5 years.
BoG believes that the completion of the 2nd review confirms the progress achieved, signalling that the conditions have improved for Greece to successfully regain market access, with support from its partners, once the programme has been completed.