BoG report for 2014: GDP +0.5%, unemployment -1%

The Bank of Greece foresees the country’s return to growth in 2014.

The report on Monetary Policy, which BoG director Y. Provopoulos tabled today in parliament, states that in 2014 Greece's GDP will grow by 0.5%, while unemployment will decline by 1%.

However, Provopoulos warns of risks and uncertainties due to the polarized political climate and expresses his concern, as next year there will be two elections. He recommends the economic policy must remain committed to the implementation of the structural reforms.

He added that further fiscal adjustment can not rely anymore on tax increases and that the Greek government should create conditions to reduce the tax burden on taxpayers, because the fiscal adjustment was based on the tax increase to a greater extent than it should and led to a significant burden on taxpayers and reduction of their income.

He recommends to intensify the efforts to rationalize the public sector with terminations and mergers of public organizations and enterprises, better control of costs and insurance funds, reform and modernization of the judicial system, improvement of the tax collection mechanism and emphasis on accelerating the process of privatizations to cover the 2013 deviations and stimulate the business climate, which will help attract foreign investments.

For developments in the banking system Provopoulos said the recapitalization created a new landscape and medium banks will have enhanced ability of credit in the economy. Alternatively, the funding of the economy could be done by the EU structural funds, the bond markets, the stock market and the EIB (European Investment Bank).