Growth gives Greece fresh ammunition against austerity

[ATHENS] The Greek government hailed Tuesday figures showing the debt-laden country returned to annual growth in 2016, using it for a fresh assault on austerity measures sought by its creditors.

The economy grew 0.3 per cent last year, according to AFP calculations using early estimates from national statistics agency Elstat, despite a contraction in the last quarter.

The figure, in line with Brussels' latest projection announced Monday, marks only the second increase in annual gross domestic product (GDP) since 2008.

The European Commission also pencilled in Greek growth of 2.7 per cent this year and 3.1 per cent in 2018.

Government spokesman Dimitris Tzanakopoulos said the estimates showed that "the Greek economy has definitely returned to growth".

He insisted at his weekly press briefing that there was "no basis" for additional austerity measures after the completion of Greece's current bailout in 2018.

Around 2,000 farmers descended on Athens on Tuesday to protest against new tax hikes and pension reforms that are part of Greece's austerity programme.

The protests came after months of failed talks between Athens and its eurozone and International Monetary Fund (IMF) creditors, raising fears of a new debt crisis that could again jeopardise Greece's place in the monetary union.

Athens faces debt repayments of 7.0 billion euros (S$10.56 billion) this summer that it cannot afford without defusing the feud that is holding up new loans from Greece's 86 billion euro bailout.

At the core of the row is whether Greece can deliver on budget targets that the IMF says are based on overly optimistic economic forecasts.

The IMF, quietly backed by Germany, insists that more pension cuts and tax hikes are necessary to reach those targets.

The government bitterly refuses more reforms, with Prime Minister Alexis Tsipras warning creditors on Saturday to "stop playing with fire" over his country's debt problems.

Top EU economic affairs official Pierre Moscovici is due in Athens for talks with Mr Tsipras on Wednesday to try and unblock the negotiations.

Talks in Brussels between Greece and its creditors on Friday ended with no breakthrough, although Eurogroup chief Jeroen Dijsselbloem said some progress was made.

The next meeting of eurozone ministers, on Feb 20, is seen as an unofficial deadline to end the stalemate ahead of important elections in European countries including France, Germany and The Netherlands.

But Mr Dijsselbloem warned Tuesday the standoff was likely to drag on.

"The IMF has to come on board," he told Dutch broadcaster RTLZ.

"It will take more time. People think that as there is a Eurogroup meeting next week we must have something worked out. But that has not been my planning."

"It is unthinkable. First the institutions must go back to Athens" to hold more discussions, he said.

The annual growth estimate for 2016 comes despite a decline of 0.4 per cent in the fourth quarter, compared with the previous quarter when GDP grew at a revised 0.9 per cent, Elstat said.

Fourth quarter GDP grew by 0.3 per cent compared with the same period in 2015.

Greek central bank chief Yannis Stournaras has warned that a quick resolution to the bailout row is crucial in order to avoid a replay of the chaos in 2015 when Greece defaulted and just barely survived in the eurozone.

"Any later, (and) the conditions will be much worse and it will be too late," Mr Stournaras told lawmakers on Monday.

AFP