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In-depth Analysis/Greece’s financial assistance programme (March 2016)

Angerer, J., Hradiský, M., Ciucci, M.,Mesnard, B., Vega Bordell, J.,  Zoppé, A., (2016), “In-depth Analysis/Greece’s financial assistance programme (March 2016)”, EuroParl/IPOL PE 574.404, 5 Απριλίου

After returning to growth in 2014 and showing unexpected resilience during the first half of 2015, Greece’s economy has contracted, though less than initially expected, in the second half of 2015. This contraction reflects sharp deterioration in confidence and renewed stress within the banking system during summer 2015 that ultimately led to imposition of capital controls in June 2015. Uncertainty stemming from prolonged negotiations in the context of Greece programme review also weighed on output developments. However, this contraction appears to be less pronounced than initially expected as evidenced by an upward revision in the latest Eurostat GDP
estimates for 2015 (from 8 March 2016). In particular, the Greek economy had contracted by 1.2% (q-o-q) in Q3 2015, before posting a marginal growth of 0.1% (q-o-q) in Q4 2015. This revised data would bring real GDP growth for 2015 as a whole to -0.3%, as compared to -0.7% based on the preliminary Eurostat GDP estimates (published on 12 February 2016). Note that the Commission (COM) expected in its winter 2016 forecast (released on 4 February 2016) a real GDP growth of 0.0% for 2015. Looking ahead, the COM foresees negative carryover effects from 2015 to weigh on output dynamics in 2016 (-0.7%) before a progressive rebound in confidence, along the ‘expected easing of capital controls and compliance with the conditionality of the new ESM assistance
programme’, helps the Greek economy return to growth in 2017 (+2.7 %). Note that between 2007 and 2015 (provisional data), the size of the Greek economy shrank by around 26%.

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