In its latest edition of World Economic Outlook and Fiscal Monitor released on April 16, ‘13, IMF sees Greek GDP contracting 4.2% in 2013 and rebounding 0.6% in 2014, while unemployment rate is expected to rise from 24.2% in 2012 to 27.0% in 2013 easing to 26.0% in 2014. It is noteworthy that IMF GDP forecasts are slightly more optimistic compared to those of the Greek government (back in November) anticipating a 4.5% contraction in 2013 and a marginal growth of 0.2% in 2014.

C/A balance (as % of GDP) is anticipated to slip from -2.9% in 2012 to -0.3% in 2013 turning positive to 0.4% in 2014, while inflation is projected to remain on negative grounds in 2013 and 2014 at -0.8% and -0.4% respectively.

IMF projects general government deficit (as % of GDP) to ease from 6.4% in 2012 to 4.6% in 2013 and 3.4% in 2014, 1.1pp, 0.1pp and 0.1pp respectively better than previous forecasts published in October ‘12. It is noteworthy that gg deficit in 2013 is expected below the advanced economy average for the first time in recent years and 11pp lower than its 2009 peak. Furthermore, IMF longer term forecasts call for a deficit of 2.2% in 2015, falling below 1% from 2016 thereafter to 0.6% – 0.7% in 2016-18.

General government primary balance (as % of GDP) is seen dropping from -1.2% in 2012 to zero in 2013 turning positive thereafter to 1.5% in 2014 and 3.0% in 2015 and hovering between 4.3% and 4.5% in 2016-18. In addition, gross financing needs, i.e. maturing debt plus budget deficit, are expected at 19.5% of GDP in 2013 increasing to 22.5% in 2014 and dropping to 15.7% in 2014.

On the contrary, IMF forecasts general government debt (as % of GDP) to rise from 158.5% in 2012 to 179.5% in 2013 and 175.6% in 2014, implying a decrease of 12.2pp, 2.4pp and 4.7pp respectively compared to October forecasts. Following a peak in 2013, debt is seen falling to 170.8% in 2015, 163.5% in 2016, 153.9% in 2017 and 144.3% in 2018.

IMF also estimates general government revenues (as % of GDP) to gradually decrease from 43.9% in 2012 to 43.0% in 2013, 42.8% in 2014, 41.7% in 2015 and 41.3% in 2018, corresponding to a cumulative decline of 2.6pp over the 2012-18 period. The adjustment in general government expenditure relative to GDP is more pronounced with the respective ratio expected to materially drop from 50.3% in 2012 to 47.5% in 2013, 46.2% in 2014, 43.9% in 2015 and 41.9% in 2018, implying a cumulative decrease of 8.4pp in 2012-18.