How to put the Greek economy on the path of recovery
AFP, Paris :
No matter the solution found for Greece’s debt crisis, fixing problems in Greek tax structures, foreign investment flows and export activity must take place for the economy to start growing again.
Athens had been able to balance its finances with austerity policies imposed by creditors as part of its bailout programme, but economists say the Greek economy remains plagued with structural weaknesses and disparities.
Sustainable growth will only happen once those problems are corrected in priority areas after the current crisis abates. According to Olivier Passet, director of economic analysis at Xerfi, resolving Greece’s pension “time bomb… is priority number one.”
“If nothing is done, the pension system may be running a deficit of seven to eight percent of GDP by 2030. Greece can’t avoid this reform,” Passet says of the huge demographic shift into retirement that most developed countries are also facing.
To balance its finances, Greece must also muscle up its tax services.
“There are clearly tax collection insufficiencies, and problems of tax evasion. Athens is going to have to find solutions,” says Xavier Timbeau, research director at the French Economic Observatory in Paris.
In 2012 Nikos Lekkas, director of Greece’s tax auditing service, estimated the income lost to evasion at 40 to 45 billion euros ($44 to $50 billion) annually, representing 12 to 15 percent of Greek gross domestic product (GDP).
“There’s an undeniable governance problem (with) established cases of cronyism and corruption” that the Greek government must put an end to, Timbeau notes.
Restoration of growth will also depend on Greece attracting a larger influx of foreign investment. To encourage that Athens must simplify its suffocating administrative regime.
Experts say more transparency, reliability and accountability in rules pertaining to business investment would go far towards luring greater volumes of investments “in future sectors like greenfield”, says Passet, as foreigners feel more secure putting down job-creating roots in the country.
“Without stability you cannot attract capital,” Timbeau says.
According to Gabriel Colletis, a University of Toulouse professor close to the ruling Syriza party, Greece’s main problem is the under-development of higher value economic activity-one consequence of an insufficiently diversified economy.
No matter the solution found for Greece’s debt crisis, fixing problems in Greek tax structures, foreign investment flows and export activity must take place for the economy to start growing again.
Athens had been able to balance its finances with austerity policies imposed by creditors as part of its bailout programme, but economists say the Greek economy remains plagued with structural weaknesses and disparities.
Sustainable growth will only happen once those problems are corrected in priority areas after the current crisis abates. According to Olivier Passet, director of economic analysis at Xerfi, resolving Greece’s pension “time bomb… is priority number one.”
“If nothing is done, the pension system may be running a deficit of seven to eight percent of GDP by 2030. Greece can’t avoid this reform,” Passet says of the huge demographic shift into retirement that most developed countries are also facing.
To balance its finances, Greece must also muscle up its tax services.
“There are clearly tax collection insufficiencies, and problems of tax evasion. Athens is going to have to find solutions,” says Xavier Timbeau, research director at the French Economic Observatory in Paris.
In 2012 Nikos Lekkas, director of Greece’s tax auditing service, estimated the income lost to evasion at 40 to 45 billion euros ($44 to $50 billion) annually, representing 12 to 15 percent of Greek gross domestic product (GDP).
“There’s an undeniable governance problem (with) established cases of cronyism and corruption” that the Greek government must put an end to, Timbeau notes.
Restoration of growth will also depend on Greece attracting a larger influx of foreign investment. To encourage that Athens must simplify its suffocating administrative regime.
Experts say more transparency, reliability and accountability in rules pertaining to business investment would go far towards luring greater volumes of investments “in future sectors like greenfield”, says Passet, as foreigners feel more secure putting down job-creating roots in the country.
“Without stability you cannot attract capital,” Timbeau says.
According to Gabriel Colletis, a University of Toulouse professor close to the ruling Syriza party, Greece’s main problem is the under-development of higher value economic activity-one consequence of an insufficiently diversified economy.
