IOBE report: Greek economy forecast to grow by 2.1 pct in 2018

The Greek economy is expected to grow by 2.1 pct in 2018, boosted by strong exports growth (+7.0 pct), according to the quarterly report of the Foundation for Economic and Industrial Research (IOBE).

Presenting its report on Wednesday, IOBE said that the contribution of investments to GDP growth was expected to reach 16 pct, while it also projected higher performance in the Public Investment Programme, extrovert sectors and privatisations. IOBE expects the unemployment rate to continue falling in 2018 and employment – permanent and temporary – to continue rising in the public sector. The unemployment rate is expected to fall to 20 pct, maybe lower.

For the banking system, IOBE expects a gradual recovery of confidence, with significant challenges remaining in 2018. The Foundation said deposits were expected to continue their gradual recovery, banks to reduce their NPEs and to further relax restrictions on the movement of capital in the country.

Takis Athanasopoulos, chairman of IOBE’s board said: “There is no doubt that conditions and prospects for the Greek economy are improving, as recorded in the GDP figures and other significant indexes. However, this improvement does not constitute the final end of the crisis. Let us remember the significant structural problems of our economy, which have not been resolved, and the risk that these positive developments will be misinterpreted and lead to an abandonment of the reform effort.”

Professor Nikos Vettas, managing director of IOBE, said that 2018 will be a significant and crucial year for Greece. “To the extent that there are no significant surprises, economic recovery will continue and become relatively stronger during the year. The main forecast calls for a growth rate of slightly above 2.0 pct this year, after a growth rate of 1.5 pct in 2017,” he said, adding that this forecast required a systematic, albeit small, improvement in the investment climate in order to materialise. “Without a recovery in investments, the economy will once again lapse into a painful stagnation,” he said.