The Foundation for Economic & Industrial Research (IOVE) has predicted that the gross domestic produce (GDP) in Greece will shrink by 1 percent in 2016, following a decline of 0.3 percent for 2015. According to IOVE’s quarterly report on the Greek economy, the upcoming measures provided in the bailout are expected to have a negative effect on private consumption, employment, retail and the food sector, although growth in tourism is expected.
Unemployment is expected to increase to 25.2 percent in 2016, having peaked at the end of 2015 at 24.4 percent. Although deflation will be bolstered by the drop of disposable income hit by the new fiscal measures, a VAT hike and upcoming increase of indirect taxes will provide some relief. Finally, the IOVE report predicts no significant change in the rate of inflation during 2016, or, if anything, a slight decline in prices.
