Greece sees swing to economic growth, after six-year recession

BUSINESS

Greece sees swing to economic growth, after six-year recession

The Associated Press Published Monday, October 6, 2014 7:17AM EDT

Student protesters in central Athens, Greece

Students from music schools chant slogans during a protest against the austerity measures affecting education budgets in central Athens, on Oct. 2, 2014. (AP / Petros Giannakouris)

Text:

ATHENS -- Greece's troubled economy is on track to emerge from a six-year recession this year and grow by 2.9 per cent in 2015, though unemployment in the bailed-out country is likely to remain high, the finance ministry said Monday.

The government -- facing the threat of an early general election -- submitted a draft of the 2015 budget to parliament that sees a return to modest growth of 0.6 per cent in 2014, ending the depression that erased roughly a quarter of the country's output.

"The country is entering a long period of sustained economic growth rates and primary surpluses that will bring growth in employment, reducing unemployment and improving living standards for all citizens," said Deputy Finance Minister Christos Staikouras.

"This is the result of unprecedented sacrifices made by Greek society, households and businesses. These sacrifices must not be wasted."

Prime Minister Antonis Samaras' conservative coalition is hoping to begin easing austerity measures and end stringent inspections by bailout creditors who provided 240 billion euros ($303 billion) in emergency loans. The bulk of funding from eurozone countries ends this year, while loans from the International Monetary Fund scheduled to continue through 2016.

Staikouras said the government is committed to reducing emergency taxes that have hit most Greeks, and announced cuts to a deeply unpopular bailout tax known as the solidarity charge.

But he conceded unemployment was likely to average 27 per cent this year before beginning a slow decline.

The Samaras government is facing a strong challenge from the anti-bailout Syriza opposition party and has called a vote of confidence in parliament this week. He could be forced to call an early general election by February, when the government would need opposition support to elect a new president.

Leading in opinion polls, Syriza is demanding a renegotiation of the bailout deals, arguing that the debt burden is too high to allow a recovery. Party officials insist a portion of the national debt should be cancelled.

The national debt is expected to reach 318.6 billion euro ($402 billion) this year, or 175 per cent of GDP, according to figures in the draft budget.