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Public Debt, Bad Loans Threaten Tentative Greek Recovery

Greece received some relatively good economic news this week from the OECD, coming hot on the heels of recent revelations the struggling country was first among 35 nations for tax hikes in 2016.
The OECD’s economic report for Greece on Monday claimed GDP growth would increase 2.3 percent in 2018 from just 1.4 percent this year, with private consumption and investment driving the improvement.
Unemployment is expected to fall to 20.5 percent next year from 21.7 percent this year, although Greece still has the highest jobless total in the EU by far.
Mitigating these were inflation expectations which were predicted to hit 1.2 percent this year and 1.0 percent in 2018.
Nevertheless, although the government was hitting its budget surplus targets, high public debt and bad bank loans continued to pose a risk to economic recovery, the OECD analysis claimed.
The mixed news follows last week’s revelation that Greek tax hikes were the highest among 35 OECD states, something which could limit growth in the coming years.
Coupled with the tax burden is London School of Economics date from June, which showed Greek wage performance was the worst in OECD states.
The OECD also noted improved tax compliance was partly responsible for the budget surplus targets being met, the organization’s governance arm on Monday said a ‘National Anti-Corruption Action Plan’ in Greece had identified “key areas of reform to strengthen integrity and fight corruption and bribery”.

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