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Greece: 2017 Budget Assessment

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WP_20150824_055Global Economic & Market Outlook – Focus Notes (Thursday, November 24 2016)

Greece: 2017 Budget Assessment  

The Greek Government submitted in Parliament the 2017 Budget. The 2017 Budget is to be voted by Parliament until December 10th 2016. Below we present a brief review of the basic 2017 Budget items:

Macroeconomic assumptions: The new budget is framed on an improved macroeconomic environment, envisaging real GDP growth of -0.3% and 2.7% for 2016 and 2017 (Table 1) respectively. That is, assuming swift implementation of the fiscal and structural reforms agenda agreed with official creditors in the context of the 3rd bailout programme. In more detail, the expected performance for 2016 is attributed mainly to investment. Both private and public consumption are expected to remain on a negative territory. For 2017, private consumption is expected to return on a positive territory (public consumption will remain negative at -0.3%) while investment will continue the positive contribution and net exports will rebound mainly on the back of an expected improvement in disposable incomes amid a further increase in employment, a rebound in consumer confidence, the anticipated improvement on credit conditions, the continuation of strong rates of absorption of EU structural funds, and the further relaxation of capital controls. Elsewhere, unemployment is projected to remain in a declining path for the fourth year in a row (22.6% in 2017 vs. 23.7% in 2016), while HICP inflation is expected to turn positive for the first time since 2012 (+0.6% in 2017 vs. 0.0% in 2016), supported by higher oil prices and the recovery of domestic demand…

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