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EC says Greece's recovery is fragile

Christian Fernsby |
The European Commission revised slightly lower its 2019 GDP forecast for Greece, to 2.1% from 2.2% previously, underlining “the fragile nature of Greece's recovery.”

“Overall, real GDP growth is forecast to reach 2.1% in 2019 and accelerate slightly to 2.2% in 2020 as private investment picks up. Downside risks are related to the stronger-than-expected pass-through of the weakening external environment and underexecution of the budget,” EC said in its Summer 2019 Economic Forecast.

EC expects private consumption to pick up in the rest of the year and “thus compensate for some of the unfavourable developments in the external sector.”

In addition to the positive effect of the minimum wage increase to household disposable income, which may be more pronounced in the second quarter, fiscal measures legislated in May 2019 should provide further support to private consumption, says.

As regards as consumer price inflation, EC said that ecent decreases in the VAT rate indicate downside risks to the inflation forecast, but the effect of the tax changes could be offset by the consumption stimulus.

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