The Bank of Greece warned Monday that the country is likely to miss its 2019 growth target due to mounting international uncertainty and doubts over the government’s commitment to reforms.
Central bank governor Yannis Stournaras, presenting the bank’s annual report , said the Greek economy was likely to grow by 1.9 percent this year. That’s below the European Commission’s forecast of 2.2 percent and Greece’s official budget estimate of 2.5 percent.
The news was a setback for the country’s left-wing government, which faces a general election this year and has promised to ease high rates of poverty after years of crisis and international bailouts.
“In the domestic environment, increased uncertainty regarding the course of post-program reforms, together with restrictions on the financing side, have an adverse effect on investment,” the central bank report said.
“Furthermore, high taxation in recent years, while halting the upward trend of the public debt, has also restrained growth momentum, reduces the competitiveness of Greek businesses, it limits improving consumer and investment confidence, and is creating tax fatigue, a shrinking tax base, and exhausting the citizens’ ability to pay.”
Greece remains under supervision of bailout lenders despite ending the rescue program in August and having twice successfully tapped bond markets this year to raise cash.
With its national debt at roughly 180 percent of gross domestic product, Greece is hoping to qualify for additional debt relief from European lenders.
Finance ministers from the 19-country eurozone are due to meet Friday in Bucharest, Romania, and will consider granting debt relief measures worth nearly 1 billion euros ($1.12 billion). Approval depends on Greece meeting a pledge to overhaul regulations protecting distressed mortgage holders. Parliament approved a new framework last week but Athens and creditors remain in negotiations over details to be included in implementation measures.q