Greece Gradually Emerging From Crisis, ECB’s Provopoulos Says

By Christos Ziotis and Marcus Bensasson on February 25, 201

Greece is gradually exiting from its crisis, with confidence building and deposits returning, even as it faces another difficult year in 2013, Bank of Greece Governor George Provopoulos said.

The country’s economy, which has shrunk 20 percent since it entered a recession in 2008, will continue to contract this year before beginning its recovery in 2014, Provopoulos said in a speech at the central bank’s annual shareholder meeting today. Unemployment will also increase this year after averaging 24.5 percent last year, according to Provopoulos, who is also a member of the European Central Bank’s governing council.

“There is no doubt that 2013 will be a difficult year, chiefly because of the continuing recession and high unemployment,” Provopoulos said in an e-mailed transcript of his speech. “The continued implementation of Greece’s program is a precondition for the country’s recovery.”

Greece has received two bailouts from the euro area and International Monetary Fund worth 240 billion euros ($318 billion) and conducted the world’s biggest sovereign debt restructuring since it triggered the region’s debt crisis in 2009. The aid has been tied to measures to cut the country’s deficit and reform its economy.

The country needs to broaden the tax base by cracking down on tax avoidance and lighten the burden on those who do pay tax, Provopoulos said. It also needs to achieve a new export-oriented growth model for its economy.

“The danger of a collapse has been avoided, the prospect of a euro exit distanced and confidence gradually restored,” Provopoulos said. “These encouraging developments don’t leave any room for complacency though.”

To contact the reporter on this story: Marcus Bensasson in Athens at mbensasson@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net