Greece economy will rise by the middle of 2016
Oct 16, 2015 07:46 AM EDT
By the middle of next year, Greece will go back to its economic growth only if the government will give importance and devoted attempt to reacquire financial strength.
Greece had experienced years of recession and the economy is gradually making a comeback and started growing again by 0.8% in 2014 and the European Commission is expecting it to increase by 2.5% this year. However, the country slid back into recession due to the rejection of agreed reforms by the left-wing government of Alexis Tsipras, as reported by Reuters.
"We were forecasting 2.5 percent growth in Greece this year, now we expect a 2.0-2.5 percent recession," Dombrovskis told Reuters on the sidelines of the International Monetary Fund's meetings in Lima.
He added that if the government could make sure of a financial stability, Greece could immediately increase its economic growth since all the fundamentals are already there.
"If the economy gets back on track, there can be also some positive surprises in terms of performance because the Greek economy is now substantially below potential and you can catch up to the potential quite quickly," he said.
The rate on the economic growth will also have a great effect on Greece's debt servicing ability. Its eurozone creditors are considering debt relief through capping its gross debt servicing costs at a maximum of 15% yearly.
Greece's Finance Minister Euclid Tsakalotos has an expectation that the economy would suffer a less severe recession this year than its international creditors assumed in drafting the country's new bailout program, as said on Tuesday. No figure was given but said on Monday the draft for 2016 budget has stuck to the bailout assumptions of a 2.3% economic contradiction this year followed by a 1.3% reduction in 2016 before growth comes back in 2017.
Many are hoping that central banks continue to support the global economy to have stock markets rise. The stimulus seems to be the poor US jobs figures from Friday, which convinced investors for the meantime that the US Federal Reserve is now improbable to raise interest rates this year. Weaker than expected, US service sector data earlier has just added kindling to its particular fire, as reported by the Guardian.
The sanguinity was aided by a comeback in commodity prices along with indefinite talk of more Chinese central stimulus bank on the way that supported mining sector.
Greece's commitment to its bailout programme was welcomed by the Eurogroup's president Jeroen Dijsselbloem. He said that the most important thing was to decide the first review as soon as possible. The first set of milestones had been agreed, and would have to be completed by the middle of October to unlock the next €2-billion payment of the remaining €3billion. The next set of milestones will have to be worked on "with great urgency" and agreed by the end of October.