Country Report Greece October 2017

Country Report Greece October 2017

  • October 2017 •
  • Report ID: 325842

Outlook for 2018-22

  • The government of Alexis Tsipras, the prime minister, comprising Syriza Coalition of the Radical Left (Syriza) and the nationalist Independent Greeks (AE), has a three-seat majority. An early election, before 2019, is highly likely.
  • Syriza is trailing in the polls behind the centre-right New Democracy (ND), which is likely to win the next election and form a coalition government.
  • To fulfil the demands of Greece's euro zone creditors, the government has committed to meeting annual primary budget surplus targets of 3.5% of GDP in 2018-22. The Economist Intelligence Unit regards these targets as infeasible.
  • We assess the likelihood of Greece leaving the euro zone at 60% in the medium term (we have not built our "Grexit" call into our five-year macroeconomic forecasts).
  • Our forecast is for annual real GDP growth to pick up from an estimated 1% in 2017 to 1.8% per year in 2018-22, as high public debt, budgetary austerity and constraints on credit hold back the recovery.
  • We forecast that annual average inflation will slow from an estimated 1.2% in 2017 to 1% in 2018, before picking up to average inflation of 1.6% in 2019-22.


  • At the Thessaloniki International Fair on September 16th, the leader of the opposition ND, Kyriakos Mitsotakis, set out his policy strategy for the country's ailing economy.
  • Mr Mitsotakis's speech was short on details of how he would fund his proposals, but it provided a clearer vision for the future than that given a week earlier by Mr Tsipras and will resonate strongly with centrist voters.
  • On October 2nd the government presented the draft 2018 budget to parliament. Predicated on real GDP growth of 2.4%, the government expects to generate a primary surplus of 3.6% of GDP.
  • On September 15th the Greek authorities belatedly granted Eldorado Gold, a Canadian mining company, permits for its Olympia project, shortly after the organisation threatened to suspend its investment in Greece. However, the dispute has not yet been fully resolved and difficulties persist.
  • Data for the first eight months of 2017 showed a budget deficit of EUR1.27bn, compared with a deficit of EUR2.68bn in the year-earlier period. The primary surplus (the balance excluding interest payments) amounted to EUR3.54bn, against a targeted EUR3.57bn, having been EUR1bn above target in January-July.
  • Working-day adjusted industrial output rose by 1.7% year on year in July. In January-July annual output growth averaged 5.5%.


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