Major disparities in EU, IMF estimates

The European Commission forecasts regarding the course of Greece’s economy bear little resemblance to those of the International Monetary Fund, even though Greece’s creditors appear to have agreed on the measures required from Athens on the basis of the more negative latter set of figures.

In its Winter 2017 Economic Forecast released on Monday, Brussels estimates that the primary budget surplus in 2016 amounted to 2.2 percent of gross domestic product (against an IMF estimate of 0.9 percent of GDP) and anticipates it to come to 1.75 percent this year (against 1 percent according to the Fund) and 3.7 percent of GDP in 2018 without any additional measures (1.5 percent for the IMF).

In its report, the Commission refers to risks of a deterioration in Greece’s fiscal performance, saying that 2017 could prove worse that expected due to the measures already taken and the impact of the uncertainty over the delay in the completion of the second bailout review. The report also mentions external factors such as international and regional geopolitical tensions and the refugee crisis.

For 2016, Brussels reversed its original estimate for a 0.3 percent contraction of gross domestic product, speaking of a 0.3 percent expansion of GDP. If the review is completed in time, it added, this year could see growth of 2.7 percent as financial conditions improve and capital controls gradually ease. Private consumption and investments are projected to accelerate, with net exports set to have a positive contribution. The economic growth rate is forecast to rise further to 3.1 percent in 2018.

The Commission also anticipates a 2.2 percent increase in employment in 2017 and 2018, with the jobless rate dropping to 20.3 percent next year.

The report estimates that the budget deficit amounted to 1.1 percent of GDP last year. It is seen at exactly the same this year before swinging to a 0.7 percent surplus in 2018. From 177.4 percent of GDP in 2015, the national debt is estimated to have expanded to 179.7 percent in 2016, and is seen dropping to 177.2 percent this year and 170.6 percent in 2018. In contrast, the IMF puts the debt at 183.9 percent in 2016 and at 180.8 percent in 2017.