At the Organization of Economic Cooperation and Development (OECD) Council of Ministers in Paris on Wednesday, Greek Finance Minister Yannis Stournaras challenged the institution’s forecast that Greece will remain in recession next year, which would mean a seventh straight year of contraction. Stournaras thinks the OECD will be proved wrong. There isn’t a Greek in the world who doesn’t hope he will be proved right.
The OECD’s recent Economic Outlook contains some alarming messages for Greece, messages that are in contrast with the recent wave of positivity from the government and upbeat assessments from the media domestically and abroad. The Paris-based organisation does not see a return to growth in 2014 but predicts a further economic contraction of 1.2 percent, a gap from Stournaras’s projections that translates into about 3.6 billion euros of economic output. It goes as far as suggesting that additional financing from the EU/IMF program will be required for Greece so automatic stabilizers are allowed to kick in if the recession turns out to be deeper than initially anticipated.
As much as Stournaras was quick to challenge the OECD’s projections on growth, he did not comment on the devastating projections for unemployment. The finance minister has designed Greece’s medium-term fiscal strategy based on average unemployment of 22.8 percent for 2013 and a lower figure of 21.4 percent for 2014. The OECD and the Bank of Greece, which also gave its forecast this week, think otherwise.