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Greek Parliamentary Budget Office Releases Gloomy Forecast for Greece's Economy

Greek ParliamentThe Greek Parliamentary Budget Office found that the Greece’s economy will face a tough few months ahead.
In its quarterly report for the April and June 2015 period, the Office noted that the capital controls in effect since June 28 will not be lifted any time soon and the costs to the Greek economy will be significant.
Among the report’s predictions for the rest of the year is a 4% to 10% decrease of the country’s Gross Domestic Product based on the European Commission‘s forecast of a 2% to 4% economic recession. The report predicts serious losses for the Greek economy in the July to September 2015 period.
“GDP is reduced by 2.8 billion euros per week due to capital controls and lack of liquidity. Or at 1.5% of the 2014 GDP in the event that the reduction of consumption reaches 80% and at 1.75 billion euros per week or 0.9% of GDP when the reduction of consumption is around 50%,” the report read.
At the same time, the country could have a 1% primary budget deficit by the end of the year, the report noted.
The report also dismissed the claim that the bailout deal the Greek government made with international creditors in Brussels was the result of a coup. Voices within Greece that cried this accusation include Greek Parliament President Zoe Konstantopoulou.
The Office found that a deal will help ensure the country’s long-term stability. While it said that a Grexit is still not out of the question, it argued it would severely damage the Greek economy.
“The events following the introduction of capital controls and the announcement of the referendum gave us a first idea of what will happen if the July 12 agreement is not implemented. If we end up returning to the drachma, the country is in danger of entering a vicious cycle of devaluation and inflation,” the report noted.

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