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article imageGlimmerings of growth in Greece

By Simon Crompton     Apr 22, 2014 in Business
According to the Foundation for Economic and Industrial Research, or IOBE, Greece’s economy is slated to stabilize this year and may possibly achieve some small growth based on projections.
IOBE, a think tank based out of Athens, also states that the return to the bond markets by Greece this month, after being estranged from it for four years, should encourage banks to raise funds and help improve monetary flow throughout the economy and increase growth.
Earlier in January, IOBE had a more pessimistic outlook for Greece, reporting in its quarterly review that the national output would shrink this year. This was supported by some iforex sources which made a similar prediction.
International lenders and Greece’s government both predict the 182 billion euro economy will escape the bonds of recession and that the economy will expand by 0.6 percent over the course of the year.
Yet, the jobless rate remains twice that of the Euro Zone average, sitting at 26.7 percent in January.
"With the Greek economy at a turning point, one of the factors that will determine whether GDP (gross domestic product) expands is tourism activity, which has a high weighting in national output," the Foundation of Economic and Industrial Research said in its quarterly review.
Hopes are that the increase in tourism, which grew by 15.5 percent last year, will continue in 2014, and hopefully grow with the signs of promise.
The IOBE forecasts a continuation of consumer price deflation, stating the average drop will be by 0.6 percent this year. Greek consumer prices fell by 1.3 percent from last March to this March.
This prolonged recession exacerbated by wage cuts and an extensive economic spare capacity places a deflating pressure on prices, and plays a part in the internal devaluation that is expected to enhance Greece’s competitiveness.
With a strong showing to revive confidence, two of the top four Greek banks have raised 2.95 billion euros combined, through equity offerings designed to fill capital shortfalls.
"The strong interest by foreign investors is proof of the increasing confidence in the viability of the country's banking system," the think tank said.
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