Over the weekend I had time to review a very damning report written by the International Monetary Fund on the situation in Greece. This provides quite a contrast to what the polite may call rose-tinted or the less so outright misrepresentation of views in the past. If we step back in time to the debt haircut imposed on Greece for the troika we were told that after shrinking by 4.3% in 2012 it’s economy would recover to flat or stability in 2013. In my article comparing all this to the March Hare from Alice in Wonderland I asked this on February 8th 2012.
The current figures point to a worse outcome for 2012 and if there is any evidence for a turn-around in 2013 I hope they will present it.
Of course there was none as it was all fantasy to achieve another fantasy which is that a national debt target of 120% of Gross Domestic Product means anything. In stead we have seen the Greek economy shrink by over 6% in 2012 and open 2013 looking weak too.
How does the IMF address this now?
Here is the new very different view on the Greek economy.
It is now projected to contract by 6 percent this year and 4¼ percent in 2013.
This is a quite shocking turnaround on two counts. Firstly it exposes the untruths of the past because as you can see from above I was worried about something like this happening at the time. Also if we look at the impact of this on Greece we see falling tax revenues combined with higher social security spending as unemployment has climbed. Indeed at 26.8% Greece’s unemployment rate has passed Spain’s and climbed to the top of a table nobody wants to lead. So the fiscal deficit disappoints and under the current plan we get more austerity which gives everything another downwards push and repeat. Or as I put it back then.