EC Spring forecast downgrades Greek growth to 2.1%

Commissioner Moscovici optimistic a broad deal can be reached on May 22 EuroGroup

The European Commission (EC) revised its initial forecast on the rate of growth in the Greek economy from 2.7% to 2.1%, on Thursday. The European Commissioner for Economic and Financial Affairs, Taxation and Customs, Pierre Moscovici explained the EC had revised its forecast downward due to the delay in the closing of the second review of the Greek program, during the presentation of the body’s spring forecasts.

The Commission’s winter forecast, published last February, predicted a growth rate of 2.7% for 2017 and 3.1% for 2018. According to the revised data, the deficit is expected to drop by 1.2% of GDP in 2017 bringing the surplus of 2018 to 0.6%. Meanwhile, unemployment figures are also expected to be affected, as the jobless rate is projected to fall from 23.6% in 2016 to 22.8% in 2017. Inflation is forecast to stand at 1.2% in 2017 and 1.1% the next year. The estimates for investments are also mitigated by the drop in growth from 12% in the winter forecast to 6.3% in the revised Spring forecast for 2017, and from 14.2% in the Winter report to 10.8% for 2018.

Mr. Moscovici appeared optimistic that there would a broader deal on the Greek issue on the May 22 EuroGroup meeting. “That is why my message, I repeat, is to close the second review and to achieve an optimistic as possible deal”, the Commissioner said. He went on to welcome the change in the climate of talks between the parties involved lauding the staff level deal reached between the Greek government and the institutions. “The climate is positive. I am sure that we will enter the next stage which is the successful completion of the review and a global deal that will bring about sustainable growth in Greece”, he said.