The autumn publication of the Eurozone Economic Forecast (EEF) states: “After several months of negotiations, Greece and its creditors agreed to a new 3 year reform program. However, there are strong doubts as to whether the 86bn euros will be enough, while the danger of a Grexit still exists besides the renewed determination of all concerned parts for the success of the deal”.
The forecast also stresses that in order to comply with the prior actions and the bailout program, Greece will have to apply a strict fiscal policy, thus reducing its budget deficit by 4bn euros almost 2.5% of the GNP for 2016. “This is expected to be a strong drawback to any economic growth. The GNP is expected to grow by a mere 0.3% for 2015 and shrink by almost 3% in 2016”.
The Eurozone
According to the same report, the Eurozone economy is getting better with the aid of low energy prices, the exchange rates and the strong demand from the UK and the USA.
The systemic dangers that threaten the Eurozone -widespread fiscal crisis and deflation- are subsiding while the recent agreement with Greece proves the renewed will of both sides to compromise.
Unemployment will continue to be the main issue in the next years. E&Y predict that the unemployment rate will fall as the return to growth is being more widely felt yet it will remain above 10% before 2019. The companies which do business in Europe will have to comply with the new reality of a slow, yet steady, economic growth.