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The prospects of exiting the crisis: could 2013 mark the beginning of the road to recovery?

Crisis Observatory 463 (800x600)

The Crisis Observatory launched successfully its first public event on the 25th of April, at the “Hermes” amphitheater of the Athens Chamber of Commerce and Industry (ACCI). The main event was an open panel discussion; the theme of the discussion was “The prospects of exiting the crisis: could 2013 mark the beginning of the road to recovery?” The panelists were Nikos Theocharakis, Associate Professor at the Department of Economics, University of Athens, Konstantinos Michalos, President of the Central Association of Commercial Chambers of Greece and ACCI and Gikas Chardouvelis, Professor at the Department of Banking and Financial Management, University of Piraeus. The discussion was coordinated by Professor Loukas Tsoukalis, President of ELIAMEP.

The discussion was preceded by an address from Mrs. Elly Andriopoulou, Operational Manager of the “Stavros Niarchos” Foundation, which funds the operation of the Observatory. Mrs. Andriopoulou made a brief presentation of the Foundations’ € 100 million initiative against the crisis. The event continued with a presentation of the work and activities of the Crisis Observatory by its Head, Dr. Dimitris Katsikas. Dr. Katsikas and Professor Tsoukalis stressed that the objective of the Observatory is to contribute to the advancement of the quality of public discourse and the availability of information available to the public for the economic and social crisis in Greece.

The discussion kicked off by Mr. Michalos, who noted that the period of the implementation of the “memorandum” has been a period of painful changes and sacrifices for the Greek people, pointing out erroneous policy choices in the course of the previous three years. He argued that harsh austerity leads to deeper recession and that too much weight has been given to horizontal cuts and over-taxation instead of the implementation of the structural reforms that the Greek economy needs. However, he did note some positive steps that have been taken towards stabilizing the economy during the last year. Political stability, promotion of structural reforms and the adoption of a new model of production for Greece are according to Mr. Michalos, the necessary requirements in order for 2013 to become the beginning of the road to recovery.

Associate Professor Theocarakis, begun by noting that recovery is a difficult task and one that will not come about automatically. Doubting the ability of economic science to make exact projections for the course of the national economy and therefore for its ability to recover from the crisis, he stressed the negative impact of the liquidity drought in the Greek economy and pointed out the weaknesses of the Greek banking system. He also noted that the increase in unemployment and the deterioration of consumption have created adverse circumstances for a recovery to growth. Moreover, he warned that the continuation of harsh austerity policies is likely to prevent the Greek economy from recovering for many years yet.

Finally, Professor Chardouvelis replied to the event’s central question, by stating that in 2013 there could be hope for the recovery of the Greek economy. Professor Chardouvelis noted a few positive developments during the last year, including the receding of the possibility of a “Grexit” scenario and the gradual restoration of Greece’s credibility. Moreover, Professor Chardouvelis referred to what he believes are five necessary prerequisites for recovery, which are the restoration of liquidity, the initiation of privatizations, the increase of exports, the reduction of taxation and the recovery of investment. At the same time, the country needs to escape potential threats like a derailment of the adjustment programme, the disruption of social cohesion and the structural problems of the Eurozone.