The Greek economy is predicted to recover in 2014, but...

Summary The Greek national budget for 2014 predicts a slight surplus, but critics believe that it is too optimistic and that the country is still far from an economic recovery. 

In a previous post, we wrote about how the Greek ministry of finance is optimistic about the budget for 2014, and how it is predicted that they will even have a slight budget surplus before interest. The economy is also predicted to grow by about 0.6%, mainly through exports, tourism and a rebound in investments. 

Now that the Greek crisis is showing slight improvements, the IMF and EU will be more open to the possibility of giving further aid and debt relief. However, there are several criticism about the 2014 budget which may derail Greece's plan and hope for 2014. First of all, the pension fund deficit is predicted to be higher than first assumed, while tax revenues might be lower than first expected, efficiently eating up the tiny surplus (about 340 million euro) that the Greek expected to have and more. Even if these factors were not present, there are serious doubts that Greece will ever be able to pay back its debt completely due to the sheer size of it. 

Also, an article in International Business Times from September 30th shows how retail sales decreased in July 2013. This was most likely a reflection of the fact that wages for employed greeks (there is still a 27% unemployment rate) have decreased by 7.5%, giving them even less spending power than they already have. As shown in other recessions, an important aspect of recovering an economy is to stimulate the economy by putting money back into hospitality and retail. 

As previously mentioned, a part of the predicted economic growth will be through tourism. However, tourism is an industry that is very sensitive to outside factors such as climate, political stability and trends. It also peaks during summer months, so predictions are hard to make since summers aren't necessarily an indication of how a country will be for the rest of the year. This summer, the political unrest in Northern Africa and Middle East gave holidayers incentives to go elsewhere, and the renewed faith in the Euro and Greece's place in the eurozone, let Greece benefit from these political factors. However, such factors can only be predicted to a certain degree, so the tourism for 2014 might bring in more money than predicted, but the pendulum can easily swing the other way too. 

As such, because the Greek budget for 2014 is so marginally in the surplus, it will not take a lot for it to go back in the red numbers. However, with new faith in Greece's ability to demand taxes and lower public spending, it will be easier for the country to attract more tourists. While the country will be in need of aid and bailouts from EU and the IMF for years to follow, it seems to have been able to put itself on the right track. 

Articles consulted and referred to in this post 
Reuters. "Greece set to emerge from recession next year, says draft 2014 budget." the Guardian. N.p., 7 Oct. 2013. Web. 25 Oct. 2013. http://www.theguardian.com/world/2013/oct/07/greece-euro.

Reuters. "Greece at odds with EU/IMF lenders over 2014 budget gap ." Reuters. N.p., 8 Oct. 2013. Web. 25 Oct. 2013. http://www.reuters.com/article/2013/10/18/greece-fiscalgap-idUSL6N0I827X20131018.

Rudarakanchana, Nat. "Greeks Not Bearing Gifts, Latest Economic Data Show." International Business Times. N.p., 30 Sept. 2013. Web. 25 Oct. 2013. http://www.ibtimes.com/greeks-not-bearing-gifts-latest-economic-data-show-1412726.

Rudarakanchana, Nat. "Greek Tourism Could Boost GDP To Historic Levels – At Least For a Brief, Fleeting Period." International Business Times. N.p., 17 Sept. 2013. Web. 25 Oct. 2013. http://www.ibtimes.com/greek-tourism-could-boost-gdp-historic-levels-least-brief-fleeting-period-1406964.