“Greece is emerging from a tumultuous 2012 with renewed commitment and action within a strengthened economic adjustment program that enjoys strong backing from its international lenders,” the report reads, adding: “After the conclusion of a six-month review of the program and the release of over 50 billion euros in December there have been some tentative signs of improvement. Banks have seen a reversal in deposit outflows and market interest rates have been reduced significantly.”
The Commission notes that ongoing structural reforms, the reduction in labor costs, the restoration of investor and consumer confidence, the gradual repayment of arrears and the reversal of the liquidity squeeze could lead to a rebound before the second half of the year. It forecasts the economy will contract by 4.4 percent this year and return to growth in 2014 at a modest 0.6 percent clip.
Drop in demand will see unemployment peak at 27 percent this year before dropping to 25.7 percent in 2014, Brussels expects.
Questioned by Kathimerini about a possible amendment to the bailout agreement given the admission of a calculation error by the International Monetary Fund, Commission Vice President Olli Rehn responded that there is no reason for a program revision. “The key to the success of the program remains in Greek hands. We expect Greek authorities, the Parliament, the government, the country’s public administration to implement everything we agreed on just a few months ago,” he said.
Meanwhile the Euro Working Group of top eurozone finance ministry officials yesterday approved the disbursement of the February bailout tranche to Greece, amounting to 2.8 billion euros.