27 November 2013

OECD: Greece - Structural reforms under way but more progress needed in boosting market dynamism

Greece has made impressive headway in consolidating its public finances and undertaking key structural reforms to boost productivity and enhance competitiveness. These reforms need to be implemented swiftly and in full to put Greece on a path of stronger, more inclusive growth, says the OECD.

In its latest Economic Survey of Greece, the OECD says the crisis has been much deeper than expected, leading to a sharp contraction in activity that has pushed unemployment up to almost 28 per cent of the labour force, created hardship for vulnerable social groups, and is posing risks to the sustainability of the country’s government debt.

Presenting the Survey in Athens, OECD Secretary-General Angel Gurría said: “For the reform efforts to succeed and be accepted by citizens, it is imperative that both the costs and the benefits of adjustment are shared fairly".

He acknowledged that the country’s government debt trajectory has worsened as a result of slower-than-expected growth, despite the 2012 restructuring. “If Greek growth again disappoints, or deflation persists – even after the implementation of structural reforms - then it will be extremely difficult to reach the debt-to-GDP target of 120 per cent by 2020. In this case, serious consideration should be given to reducing the current debt burden", he said.

The Survey says accelerating and broadening the structural reform programme is essential for a sustainable recovery. It says privatisations should be speeded up, particularly in the energy sector and in railways, regional airports, ports and real estate.

The report recommends better targeting of benefits, including a minimum income scheme, to strengthen the safety net. Health care cuts must focus on further reducing inefficiencies while safeguarding cost-effective and critical services.

The OECD’s Competition Assessment of Laws and Regulations in Greece complements the Survey by recommending policies to achieve greater competition, widen consumer choice and lower prices. The Competition Assessment scrutinises more than a thousand pieces of legislation in four sectors: food processing, retail, building materials and tourism. If the recommendations are fully implemented, the benefit to the Greek economy in efficiency gains and increased purchasing power for consumers is estimated at €5.2 billion a year, or 2.5 per cent of GDP.

The OECD is also working with Greece to reduce administrative red tape. It estimates that by lifting regulatory obstacles in a number of sectors by 25 per cent, businesses could save around €1.8 billion annually, while supporting growth in productivity.

Press release

Survey

© OECD