IMF slashes GDP fore­cast to 2.2 per­cent

Fund warns Euro­peans against ground­less pro­jec­tions and frame­works, call­ing for re­form im­ple­men­ta­tion

Kathimerini English - - Focus - BY EIRINI CHRYSSOLORA

The In­ter­na­tional Mon­e­tary Fund has low­ered its pro­jec­tions on Greek growth from last fall and warned against “un­rea­son­able fore­casts” and “un­jus­ti­fi­able frame­works” by the coun­try’s Euro­pean cred­i­tors.

In its World Eco­nomic Out­look, pub­lished yes­ter­day, the Fund ar­gued that growth in Greece this year will come to 2.2 per­cent against a fore­cast of 2.8 per­cent last Oc­to­ber, but this will not put the sus­tain­abil­ity of the coun­try’s debt at risk. It ac­tu­ally es­ti­mated a ma­jor gross do­mes­tic prod­uct in­crease of 4.2 per­cent for the last quar­ter of 2017.

No­tably, the bud­get es­ti­mate for this year’s growth is 2.7 per­cent, and af­ter the down­ward re­vi­sion of the 2016 GDP data and de­lays to the sec­ond bailout re­form there have been much greater ad­just­ments to Greek growth fore­casts for this year by banks and rat­ing agen­cies.

For 2018, the IMF es­ti­mated that growth will amount to 2.7 per­cent, though in the Oc­to­ber-De­cem­ber 2018 pe­riod growth will be at just 2 per­cent. In 2022 it will drop to an ane­mic 1 per­cent, the IMF ex­pects.

In an in­ter­view with the Lead­ing Euro­pean News­pa­pers Al­liance, IMF Manag­ing Di­rec­tor Chris­tine La­garde said that in the long run it makes sense for the Greek pri­mary bud­get sur­plus to amount to 1.5 per­cent of GDP, con­trary to the Ger­man view in fa­vor of a 3.5 per­cent pri­mary sur­plus. La­garde ar­gued that this rate is “sen­si­ble given all that the econ­omy has gone through and given the Greeks’ ca­pac­ity to re­form.”

She did add that “if the Euro­peans de­ter­mine dif­fer­ently, then we need to take that into ac­count. But we can­not adopt un­rea­son­able fore­casts or build un­jus­ti­fi­able macroe­co­nomic frame­works.”

La­garde re­it­er­ated that the two re­quire­ments for the par­tic­i­pa­tion of the IMF in the Greek pro­gram are the im­ple­men­ta­tion of re­forms by the Greeks and the re­struc­tur­ing of the debt. “We need solid re­forms, and we are get­ting there: the team is go­ing to be back in Greece to ne­go­ti­ate, fine-tune, put things on pa­per, so as to be a bind­ing agree­ment be­tween all the par­ties,” she said as a team of cred­i­tors’ ex­perts is ex­pected in Athens next week to wrap up talks on cuts worth 2 per­cent of GDP from 2019 on­ward.

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