It is not the adjustment programme which is causing the recent decline in GDP. The current economic depression is an unavoidable correction of the substantial positive output gap that has built up until 2009. Is there any alternative to the current adjustment? We do not help Greece by creating false expectations. Calls for loosening the fiscal stance are illusory.
Greece could hardly face larger financial constraints than at the moment: it has lost market access and can only draw on a fixed envelope for official support. There is only one way forward: restoring fiscal sustainability and competitiveness, which will, in turn, bring back sustained growth.