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Financial Times on Greek Growth Sustainability

The Financial Times published an article on the economic developments of Greece, under the title “Signs of revival for Greece after years of pain”.
The article mentions that Greece will return to positive economic growth this year, after the longest and deepest postwar recession. But, in order to achieve a sustainable recovery more reforms are needed.
“The signs of economic crisis are visible everywhere in Athens, from shuttered shops and graffiti-sprayed public buildings to people of all ages ransacking dustbins in wealthier neighborhoods of the capital. Six years of recession, the worst in memory, have taken a heavy toll on Greece. The country’s output shrank by almost 25 percent, as tens of thousands of family owned businesses collapsed, while pensioners and the unemployed suffered a disastrous fall in living standards amid deep cuts in social spending,” Kerin Hope mentions in the article.
According to Hope, official estimates show a 0.4-0.6% growth this year, but some analysts expect 0.9-1% due to tourism growth.
However, it is unclear whether Greece can pull off sustained annual growth rates of about 3 percent, which is needed to increase the primary surplus at 4.5% of GDP in 2016 and achieve a debt reduction.
“The government has adopted most of the 550-odd reforms in a “toolkit” of measures prepared by the Paris-based Organisation for Economic Co-operation and Development to reduce barriers to competition, yet some measures have been delayed or diluted because of pressure from powerful interest groups,” the article notes.
These developments contribute to the Greek “success story” being promoted by Greek Premier, Antonis Samaras. However, more hurdles must be overcome before Greece can reach a sustainable level of recovery. The first hurdle for the Greek government is the European Central Bank’s stress tests later this year. The second is identified as the ongoing negotiations with Troika of international lenders on debt relief and third the election by parliament next February of a new president to replace the incumbent Karolos Papoulias.

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