Greece to stay in recession in 2014, may need rescue: OECD

OECD says the Greek economy would contract by 0.4% and the country will likely need additional aid

AFP

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Greece to stay in recession in 2014, may need rescue: OECD

OECD secretary-general Angel Gurria (left) and Greece’s minister of development Costis Hatzidakis hold a copy of the OECD Competition Assessment Reviews for Greece in Athens on 27 November. Photo: Louisa Gouliamaki/AFP

Athens: Greece will remain mired in recession in 2014 for a seventh straight year, and is likely to need more financial assistance, the Organisation for Economic Cooperation and Development (OECD) said on Wednesday, in contrast to forecasts by Athens.

OECD said the Greek economy would contract by 0.4%, and said Greece was likely to need additional aid. “The need for further assistance to achieve fiscal sustainability cannot be excluded,” the OECD said. “If negative macroeconomic risks materialize...serious consideration should be given to further assistance to achieve debt sustainability,” it said.

Greece last week unveiled a budget in which it said the deep recession in the economy would end next year with 0.6% growth, following a 4.0% contraction in 2013. But the budget was tabled without Athens having reached a full agreement with auditors from the International Monetary Fund, the European Central Bank and the European Commission.

In a separate study, the OECD said Greece’s crisis-hit economy could gain by at least $7 billion if hundreds of trade restrictions were abolished. The organization said it had found 555 regulatory restrictions that were “potentially harmful” to competition, in a study commissioned by the conservative-led Greek government. The sectors examined were food processing, retail trade, building materials and tourism, which account for 21% of the Greek economy and almost 27% of total employment, according to 2011 figures.

“If the particular restrictions are lifted, the OECD has calculated a positive effect to the Greek economy of around €5.2 billion,” the organization said. “But the positive effects on the Greek economy over time are likely to be far greater,” it said.

Among the recommendations are the full liberalization of Sunday trade, which is currently restricted to a handful of pre-holiday sales periods. The move is opposed by Greek trade associations on the grounds that most businesses are family-operated and are unable to hire more staff owing to persistently poor sales, made worse by recession and three years of tax increases.

The OECD also suggests the abolition of taxes on advertising, flour and cement and the liberalization of prices for over-the-counter medicine and dietary supplements. The coalition government of conservative Prime Minister Antonis Samaras is attempting to push through legislation liberalizing the trade and labour sectors. AFP bbc

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