Analysts say a decade may be needed to heal wounds of crisis

After a decade-long crisis with a contraction of 25 percent, Greece’s economic recovery does not have the features that would put the country safely beyond risk. It is weaker than expected and quite shallow, as it seems to be based mainly on the flourishing of tourism and not on a broader spectrum of activities.

This is the assessment of financial analysts contacted by Kathimerini following the publication of provisional data on second-quarter annual growth, which came to just 1.8 percent, down from 2.5 percent in the first quarter.

A 2 percent growth rate, as projected now for the entire 2018, is certainly disappointing for a country that has undergone such a deep recession and is in a rush to recover lost ground, analysts note. The eurozone boasted a growth rate of 2.4 percent last year and the other countries to emerge from a bailout program fared even better, with Portugal at 2.7 percent, Cyprus at 3.9 percent and Ireland at 7.2 percent.

In the fall of 2016 the European Commission had forecast a growth rate of 2.7 percent for Greece in 2017 and 3.1 percent in 2018. This eventually dropped to almost half (1.4 percent) last year and for this year it has been revised at 2 percent.

According to the government’s creditor-approved midterm fiscal plan, the growth rate will only edge up to 2.4 percent in 2019 and to 2.3 percent in 2020, before sliding back to 1.8 percent in 2022. The International Monetary Fund, meanwhile, sees growth coming to 2.4 percent in 2019, 2.2 percent in 2020, 1.6 percent in 2021 and 1.2 percent in 2022. The prospects are not great and reality may once again prove even more negative.

Athens University Professor Panayiotis Petrakis says the he expects it to take an entire decade to heal the wounds of the crisis. “The expected low-rate recovery promises an exceptionally lengthy (some 10 years long) period of wound healing from the eight-year crisis. Therefore, the theory of a sudden and impressive rebound has not been vindicated, nor has the triumphant emergence from the third bailout program,” he says.

No doubt the main priority at the moment concerns the strengthening of investments, say the analysts. For these to happen, though, reforms need to continue, the debt burden needs to be lightened and the bad habits of the past must be broken.