Deposits, growth forecasts drop

Households withdrawing money to pay taxes, while Brussels brings down estimates of economic expansion

The prospects of the Greek economy are looking far from rosy this fall, as increased tax obligations culminating this period are eating into the already small deposits of Greek households and the European Commission has revised downward its estimates for the country’s growth for this and the coming years.

Figures seen by Kathimerini show that in early November deposits in Greek banks have gone down by 600 million euros compared to end-September. From 142 billion euros at the end of September deposits came to 141.6 billion at end-October and another 200 million left the banks in the first few days of this month. This has reversed the course up until August, when deposits showed a significant rise.

The Commission’s fall forecasts on European economies estimated Greece’s growth this year at just 2 percent, against 2.3 percent estimated in the spring forecasts.

However, the Commission offers a glimmer of hope regarding a solution to the 2019 budget conundrum without the planned cuts to pensions, by highlighting the positive impact that avoiding the measure would have on growth.

Brussels estimates that after the pension cuts the 2019 primary budget surplus will amount to 3.9 percent of gross domestic product (compared with 4.2 percent estimated by the government in the draft budget), with the growth rate at just 2 percent next year. Athens anticipates 2.5 percent. Yet if the pension reduction is avoided, Brussels says that offsetting measures would also be left out, keeping the primary surplus at 3.5 percent of GDP, in which case the growth rate could rise to 2.3 percent in 2019 and 2020.

On the contrary, the International Monetary Fund insisted through the head of its European Department, Poul Thomsen, that the pension cut as well as the planned reduction of the tax free ceiling as of 2020 are necessary measures, adding that if there is indeed some fiscal space it should be used for other measures that would boost growth.