You are here

Greek think tank IOBE sees Greek economy in recession in 2016

1111636541957 - 30_10_2015 - EUROZONE-GREECE_BANKS.jpg
A rise in the number of banks giving up primary dealer roles in European government bond markets threatens to further reduce liquidity and eventually make it more expensive for some countries to borrow money.

[ATHENS] Greece's economy contracted about 0.5 per cent last year, less than previously expected, and will likely stay in recession this year without a strong surge in investment, the country's influential think tank IOBE said in a quarterly report on Thursday.

"The recession in 2015 is projected at around 0.5 per cent, smaller than initially estimated when the economy entered a phase of capital controls," the Foundation for Economic and Industrial Research said in the report.

IOBE's previous forecasts in October had projected a 1.5 to 2.0 recession in 2015.

The milder contraction last year was attributed to strong tourism with cheaper energy costs and a weaker euro helping out on the balance of payments front.

But investment remains a weak spot that will keep the 173 billion euro economy in recession this year as well. IOBE expects the economy's contraction this year will be a bit bigger compared to 2015.

"The weak link in the national output equation, once again will be investment. Growth cannot come before conditions are created for a strong investment wave," IOBE said.