BoG: Economy shrank 0.2 pct in 2015

Central banker Yannis Stournaras estimated on Monday that 2015 ended with a small contraction of the economy – by 0.2 percent of Greece’s gross domestic product – lowering the official estimate for zero contraction, as included in the state budget of 2016.

Addressing a luncheon in his honor by the American Hellenic Chamber of Commerce in Athens, the governor of the Bank of Greece noted that there is possibility that the economy will return to growth this year, but only if the bailout review is concluded rapidly (a point that Stournaras repeatedly stressed in his speech) and if the required reforms are implemented.

The BoG chief also called on pro-European opposition parties, as well as the country’s creditors, to learn from the errors of the past and foster a spirit of cooperation.

He avoided making any forecast of when the capital controls might be lifted, and said it was necessary to strengthen the Greek economy at this stage, “as the clouds have gathered over the global economy.”

Although Stournaras spoke of milder consequences than feared from the 23-day bank holiday last summer and the introduction of capital controls, he criticized the SYRIZA-Independent Greeks government and, to a lesser extent, the previous, New Democracy-PASOK administration regarding their negotiations with the creditors and the non-completion of the review scheduled for late 2014.

“At end-2014 and in early 2015, after six years of recession, the positive impact [of the measures] had started to become apparent: GDP grew 0.7 percent in 2014 and there were positive growth rates in the first half of 2015 too. This recovery would have been consolidated and the final result for 2015 and 2016 would have certainly been positive had it not been for the soaring uncertainty from the last few months of 2014 up to the agreement reached with the EU peers at the summit on July 12, 2015,” Stournaras said.

“The experience of the second half of 2014 and mainly the first half of 2015 should not be repeated, as it contributed toward the growth of uncertainty, the decline in confidence and the deterioration in the liquidity conditions of the Greek economy and eventually the return of the Greek crisis,” warned the head of the central bank.