The European Commission Autumn Economic Forecast presented today was titled “Gradual recovery, external risks”. The chapter regarding Greece is titled “Economic recovery in sight”.

Noting the deccelerating pace by which GDP has been contracting throughout 2013 (3,8 per cent in the second quarter), recession forecast throughout 2013 has been lowered to 4.0 per cent (from 4.2) with reservations due to tax collection concentration in the last quarter of the year that could hamper consumption.

A very important remark found in the report is that “Current projections assume any fiscal gaps for 2014 and 2015 are filled through measures to be discussed during the on-going review”, which doesn't leave a lot to the imagination concerning the possibility that new cuts are coming for the country.

Growth of 0,6 per cent is expected in 2014, which should strengthen greatly in 2015, at 2,9 per cent – when consumption will “no longer be a drag”. The forecast is based on the assumption that investment will pick up, combined with the launch of big projects, namely “motorway construction”.

EC_Greece_Forecast_Autumn_13.pdf

The Commision is expecting unemployment to peak at 27 per cent for 2013. However, evaluating that reforms have already started being effective in bringing the labor cost down, the report foresees the number to drop to 26 per cent in 2014 and to 24 per cent in 2015. These forecasts are marked as “relatively strong decrease” in the report's text.

The general government deficit is placed at 13.5 per cent of GDP, 10.6 of which accounts to burdens by the bank recapitalization. Excluding that and other factors such as profit returns from Greek bonds by the ECB, the deficit is expected to reach 4 per cent. In 2014 it is expected at 2 per cent in 2014 and 1 per cent in 2014.

As for the government debt, it is – yet again – expected to peak, at 176.2 per cent this year, and to start declining slightly from 2014 (at 176 per cent) and to somehow drop 5 points in 2015 (170,9 per cent).

As for the risks that could wipe out the forecasts above, the EC focuses on “policy implementation slippages” that could undermine confidence, especially for 2014-2015.

You can watch the presentation of the Forecast, which today marks its 50th anniversary, below: