piraeus bank group

Greece: 2015 - 2017 Outlook / July 12th Agreement: Negative but Manageable

  • In 2015, the economy will return to recession due to the negative impact of the continuing uncertainty, the capital controls and the new fiscal adjustment measures.

  • In Q1-2015 growth rate was 0.4%, but it is estimated to decline by -0.4% in Q2-2015 (-0.5% QoQ), -3.5% in Q3-2015 (a 2.0% - 2.5% decrease QoQ) and -5.0% in Q4-2015 (another 2.0% - 2.5% decrease QoQ). In 2016 growth is estimated to range between -3.0% and -2.0%.

  • Growth will pick up only in Q4-2016, assuming that structural reforms and an extended privatization program will materialize. We expect the economy to maintain its momentum in 2017 with a growth rate between 2.0% to 3.0%.

  • In 2016, unemployment rate will range between 26% and 27%, close to the 2015 levels. In 2017, unemployment rate will decline as the economy will return to growth.

  • In Q4-2015, inflation will turn to positive territory due to the increase of VAT.

  • Following the June 26 announcement of the referendum, events came thick and fast, resulting in the achievement of an Agreement at the Euro Summit on July 12.

  • In a first attempt to estimate the impact of the crisis, we present a partial equilibrium analysis, in which we examine the impact of the measures on nominal households’ disposable income, consumption and GDP.

  • The key conclusion is that the measures will be recessionary but manageable. Based on the decrease in consumption alone, Nominal GDP is expected to contract aprox. by 0.5% in 2015H2 and by 1.0% in 2016. However, both investments and external trade are most affected by uncertainty, political stability and – especially for investments – EU Funds inflows, which if utilized in due course could prove to be decisive.


Ilias Lekkos

Group Chief Economist


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