All things come to an end, eventually. At some stage, the Greek economy must “turn the corner”, “bottom out” or whatever. The effect of spending cuts, tax increases, social security reforms and relaxation of employment legislation will produce a time when the economy ceases to contract and returns to growth. The Greek Finance minister, Yannis Stournas, is predicting that the Greek economy will return to growth in 2014. It is unlikely that all will be sunshine and flowers even then, rather the situation will stop getting worse. The Greek economy has been contracting for 24 straight quarters and the country has overtaken Spain as the nation with the worst unemployment crisis in the European Union at 26.8%.
Speaking in an interview with the BBC’s Mark Lowen, Mr Stournas was bullish about Greece’s prospects: “There is definitely a glimmer of hope; light at the end of the tunnel. The probability of Greece leaving the euro - Grexit - is now very small. We have managed to turn the economy around. From the markets, there's much more optimism. Deposits are coming back to banks, the government is paying its arrears to the private sector and there is a change in how Europe sees us. So all the leading indicators are positive. We are two-thirds of the way towards our target. So people can have hope.”
The minister is confidently expecting the recovery to kick-in by Q4 2013 with a return to growth next year. However, the Greek economy is expected to contract by a further 4.5% this year. The nation is still mired in debt which is estimated to be 180% of the country’s GDP. The EU/IMF bailout accords require that Greek debt is restored to a “sustainable” level of 124% of GDP by the year 2020 – just seven years down the line.