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Citi: Greece will not be able to achieve growth and surplus targets

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Greece wll not be able to achieve its growth and surplus targets this year and the next, says Citigroup in its monthly Global Economic Outlook report. Citis projections lead to the conclusion that reduction of the tax-free threshold will be implemented one year earlier than initially agreed (as of 1.1.2019 instead of 2020).

GDP growth came back in 2017, albeit weaker than projected in the bailout programme, due to still-tight domestic liquidity conditions (amid ongoing deleveraging and capital controls), weak external competitiveness and ongoing fiscal tightening, in our view, Citi notes.

Fiscal targets on the other hand were probably overshot and this raises the likelihood of a “clean exit” from the bailout in Aug-18, the report adds and it stresses that some debt relief deal is also likely before Aug-18, but unlikely to be meaningful in size. 

According to Citis projections, GDP growth reached 1,3% in 2017, while in 2018 it will reach 1,4%, well below Greek governments target of 2,3%, and in 2019 it will reach 1,5%.

Primary surplus will hit 3,2% this year, and 3% the next, well below the bailout target which is set at 3,5.
 
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