Greek economy to shrink for seventh year, OECD says

OECD Secretary-General Angel Gurria and Greece's Minister of Development Costis Hatzidakis unveil the report The OECD's forecast for Greece contrasts with the government's own projections

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The Greek economy will keep shrinking next year and may need more financial help, the Organisation for Economic Co-operation and Development (OECD) says.

The OECD's forecast of 0.4% contraction contrasts with the Greek government's prediction of 0.6% growth in 2014.

The OECD also said the recession in Greece had been "much deeper than expected" and that debt would not fall below 160% of GDP before 2020.

It would mark the seventh consecutive year of recession for Greece.

Since 2010, Greece has received rescue loans from the International Monetary Fund and European countries. In return, it has pledged to cut its debt and implement economic reforms.

Start Quote

Fresh pasteurised milk in Greece is up to 34% more expensive than the European average”

End Quote Costis Hatzidakis Greek Development Minister
Deflation

However, the OECD's report suggests Greece may require more help.

"The need for further assistance to achieve fiscal sustainability cannot be excluded," the report said.

"If negative macroeconomic risks materialise... serious consideration should be given to further assistance to achieve debt sustainability."

The study also said that falling prices in Greece could put pressure on the country's ability to meet the terms of its bailout.

This year, the Greek economy experienced deflation - falling prices - for the first time in more than four decades.

"Deflation pressure may be stronger and last longer than expected," the paper warned.

Some analysts say falling prices in Greece are not entirely unwelcome, since it could make companies more competitive abroad and ease pressure on households.

However, Greece's Development Minister, Costis Hatzidakis, warned that some staple foods have become more expensive in Greece than elsewhere in the eurozone.

"Fresh pasteurised milk in Greece is up to 34% more expensive than the European average. We will not tolerate this any longer," he said.

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