Greek economy to miss growth forecast in 2014

THE TROUBLED Greek economy will continue to shrink in 2014, despite official forecasts to the contrary, according to international researchers.

The Organisation for Co-operation and Development (OECD) released an updated economic survey yesterday, suggesting that the embattled Mediterranean economy will contract by 0.4 per cent next year.

However, the Greek government has forecast that growth of 0.6 per cent will finally return in 2014.

If the OECD’s prediction is correct, 2014 will be the country’s sixth full year of recession. The Greek economy began shrinking in the last quarter of 2008. The report also lays out a blueprint for potential deregulation and privatisation in Greece, which it hopes could have significant benefits for the country’s economy.

The research on improving competition recommends that the government abolish a range of barriers to entry, including licences to trade asphalt, requirements for permits to invest in tourist activities, and agricultural strictures.

According to the OECD, despite significant liberalisation of product markets, Greece remains one of the most heavily regulated of the world’s advanced economies.

The report also endorses planned privatisations of Greek railways, ports and regional airports, which it says could be a significant opportunity for private investment.

Despite the OECD’s pessimistic prediction for Greece’s growth in 2014, Capital Economics’ latest fiscal report recognises that the country has raised more tax and spent less than it expected to this year.

Ben May, European economist at Capital Economics, said: “This supports the view that the wider general government primary budget balance will also be in surplus, a key condition for further debt relief from the rest of the Eurozone in 2014.”