Insecurity, Lagging Negotiations Dampening Investment Climate in Greece

The lingering insecurity due to ongoing bailout negotiations as well as resultant negative publicity concerning a potential “Grexit” are expected to take a toll on Greece’s investment climate and any prospective scope for growth, according to the Foundation for Economic & Industrial Research (IOBE).

In its latest three-month financial report, the IOBE think tank forecasts a slower pace of decline (to 22.3 percent) in the jobless rate, an increase in employment for external sectors such as manufacturing and tourism, and adds that it expects upcoming structural changes to stimulate the labor market through temporary employment programs.

“The ongoing evaluation process and the stalling negotiations, however, are distracting attention from necessary market liberalization measures, the elimination of corruption and the promotion of growth”, IOBE President Takis Athanasopoulos said.

At the same time, the IOBE expects pressures through further measures implemented in January (direct-indirect taxation) on private consumption and employment in retail trade to determine inflation at 1.3 percent for 2017. IOBE analysts estimate that growth of the Greek economy will range between 1.5 percent and 1.8 percent, missing the program’s target of 2.7 percent.

Although the “Greek economy has pulse” due to the good performance of specific sectors, there is an added negative factor parallel to the delays, says IOBE Director General Nikos Vettas, unforeseen international developments  such as Brexit, new US policy, etc.