There has been a strong tourism revival as Greece regains stability and competitiveness. The budgetary situation continues to improve. The ratio of government debt to GDP is expected to peak at some 176 per cent in 2013.
The first half of 2013 was marked by an overall softening of the recession and the first signs of reaching the bottom of the cycle. For the last three quarters, real GDP has been contracting at a decelerating pace: by a -5.7% y-o-y in the final quarter of 2012 and -5.6% in the first quarter 2013 to -3.8% in the second quarter.
Despite a further concentration of tax payments in the last quarter of 2013, which is expected to weigh on consumption, real GDP growth has been revised upwards for 2013 and is now projected at -4.0%.
In 2015, the recovery is forecast to gain strength, as investment becomes the main engine of the recovery. A rebound in exports in the context of the euro-area recovery should support a revival in goods export growth as well as stronger shipping and tourism revenues. With consumption no longer being a drag, real GDP growth is projected at 2.9%.
The unemployment rate is projected to reach 27.0% in 2013 owing to falling aggregate demand. The current-account deficit is projected at -2.3% of GDP for 2013 and is expected to narrow to -1.9% in 2014 and -1.6% in 2015, as export and import growth pick up along with the economic recovery.
In structural terms, the budgetary adjustment has been very large, leading to a projected structural surplus in 2013, up from a deficit of nearly 15% in 2009, reflecting a clear turnaround in the fiscal position compared to the beginning of the crisis. The headline general government deficit is now estimated to be 9% of GDP in 2012.
The ratio of government debt to GDP is expected to peak at some 176% in 2013. After a marginal reduction in 2014, the debt ratio will decline more markedly in 2015 and beyond the forecast horizon as the fiscal balance continues to improve and economic growth resumes.
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