OECD Economic Surveys: Greece

Every 18 months
1999-0286 (online)
1995-3224 (print)
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OECD’s periodic surveys of the Greek economy. Each edition surveys the major challenges faced by the country, evaluates the short-term outlook, and makes specific policy recommendations. Special chapters take a more detailed look at specific challenges. Extensive statistical information is included in charts and graphs.

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OECD Economic Surveys: Greece 2013

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27 Nov 2013
9789264206403 (PDF) ;9789264206397(print)

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OECD's 2013 Economic Survey of Greece examines recent economic developments, prospects and policies. Special chapters cover restoring growth and fairly sharing the social impact of the crisis.

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  • Basic statistics of Greece, 2012
  • Executive summary

    Greece, which has been under an internationally coordinated adjustment programme since 2010, has made impressive headway in cutting its fiscal deficit and implementing structural reforms to raise labour market flexibility and improve labour competitiveness. Shrinking domestic demand has also led to a substantial reduction of the current account deficit. Slow product market reforms held back price competitiveness and exports in the recent past, but there are signs that the fall in unit labour costs has started to pass through to export prices and competitiveness. The depression has been much deeper than expected, which has undermined debt sustainability, induced a dramatic rise in unemployment, which affected more than 27% of the labour force at mid-2013 and raised social tensions, especially in the first years of the programme. Economic growth is held back by weak domestic and global demand, difficult access to credit and limited macroeconomic policy room for manoeuvre. The fiscal stance will remain restrictive, although less so in 2014 than in recent years. Encouraging economic developments in mid‑2013 related, inter alia, to a good tourism season, which are expected to continue through 2014, mitigate the risks to growth. However, these risks are still on the downside. Together with the additional adjustment needed on the fiscal side and price competitiveness, the need for further assistance to achieve fiscal sustainability cannot be excluded.

  • Assessment and recommendations

    Greece has made substantial progress in reforming its economy in a short period of time. A record fiscal consolidation by OECD standards has reduced the deficit, pension and health care reforms have enhanced longer-term fiscal sustainability, and structural reform has improved labour market flexibility and cost competitiveness. However, the adjustment programme agreed in 2010 between the Greek authorities, the International Monetary Fund, the European Commission and the European Central Bank has not yielded the expected results in restoring activity, which has been hit much harder than in other euro zone countries with adjustment programmes, such as Ireland, Portugal or Latvia (which has a euro peg). This has worsened the debt problem, despite the debt restructuring that took place in 2012, while unemployment has sharply increased. Restoring growth, making it sustainable and dealing with social costs are essential to the success of the adjustment programme.

  • How to get growth going

    The radical adjustment programme initiated in 2010 based on strong fiscal consolidation, deep structural reforms and an internal devaluation to restore international competitiveness has sharply reduced Greece’s fiscal deficit, increased labour market flexibility and reduced labour costs. Shrinking domestic demand has also led to a substantial reduction of the current account deficit. Pension and health care reforms have strengthened longer-term fiscal sustainability. However, despite several revisions, the programme has failed to restore price competitiveness, growth and public debt sustainability. The fiscal contraction has deepened the depression. Economic recovery has been held back by the inability of the banking sector to supply credit and by persistent uncertainties related to the large public debt. Given the time it takes for structural reforms to bear fruit, robust and sustainable growth would be underpinned by faster product market reforms to accelerate price adjustment and foster the reallocation of resources towards more productive and export sectors. Moreover, a more efficient and modernised civil service is essential to improve the quality of and trust in public services, increase willingness to pay taxes, and to strengthen the rule of law, competitiveness, and foreign investment.

  • A fair sharing of the costs and benefits of adjustment

    Poverty and income inequality have worsened since the onset of the crisis. While the design of fiscal measures has mitigated the burden sharing of fiscal adjustment, as the recession has deepened unemployment has risen, earnings have declined and social tensions have increased. Getting people back to work and supporting the most vulnerable remain priorities for inclusive growth and distributing the costs of adjustment equitably. Within the limited fiscal space this calls for continued reforms in targeting social support, especially housing benefits, extending unemployment insurance and introducing a means-tested minimum income. Sustaining universal access to good health care is also essential. Well-designed activation policies are important to bring the unemployed, especially the young, to work. At the same time, it is important to strengthen the effectiveness of the labour inspection to ensure full enforcement of the labour code. Decisive steps to contain tax evasion are also critical to social fairness. Reforms by the government in many of these areas are welcome and need to continue.

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