Delays or backtracking on reforms would weaken the positive outlook and impact negatively on investors’ confidence in the future course of the Greek economy. Therefore, economic policy should remain focused on the implementation of the remaining programme measures and the preparation for the timely conclusion of the fourth and final review, which will mark the end of the ESM programme.
Conversely, a reduced rate of growth of potential output would require slower growth of actual GDP to keep resource pressures from increasing. I’d like to spend a little time examining in greater depth the outlook for some of the factors that determine potential output, starting with the labor force.