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Bank Of Greece: Economy To Emerge From 6-year Recession In 2014

Greece's central bank said on Tuesday that the country's economy is set to exit a six-year long recession and start recovering next year.

In its Interim Report On Monetary Policy, the Bank of Greece said, "It is now reasonable to forecast that 2014 will see the end of the recession and the start of recovery."

In its previous report, the central bank mentioned that the economy was on track for stabilization. The bank sees 0.5 percent growth for next year.

That said, the 2014 outlook is subject to considerable uncertainty, the bank cautioned. "A major element of uncertainty is the political climate, often marked by polarisation and open confrontation, at a time when what is needed is the exact opposite," the report said.

Greece faces an election in 2014 and the central bank urged that the economic policy must remain focused on the implementation of structural reforms.

The government must rigorously pursue the fiscal adjustment programme and hasten the restructuring of the economy via structural reforms, the bank said.

The bank trimmed its GDP forecast for this year and now sees a contraction of almost 4 percent versus the earlier prediction of 4.6 percent.

The economic recovery foreseen for 2014 is expected to be supported by improvements in consumption, foreign demand, non-residential construction and a stepping-up of privatisations.

Further, a faster utilisation of EU funds and resources available from the European Investment Bank, for the financing of infrastructure investment and small- and medium-sized enterprises, is also expected to underpin the recovery.

The bank also expects unemployment rates, one of the highest in Eurozone, to start declining next year.

The central bank also expects to see a primary surplus in 2013, after several large deficits. Further, the bank expects the current account to show a surplus in 2013.

The bank attributed the surplus expectation to a decline in imports, buoyant tourism receipts and higher exports of goods.

Confidence is gradually taking hold, the bank said, adding that the privatisation programme is making progress after significant delays in previous years.

"The restructuring and consolidation of the banking system was smooth, without a single depositor having incurred a loss on their savings, in other words without any disruption to financial stability," the bank said.

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