February 21, 2012
Greeks will have to suffer further wage cuts than the 15% planned for the next three years in order to restore their country's competitiveness, senior EU officials have admitted.
The size of the IMF's contribution to the €130bn bailout – finally agreed on Tuesday after 14 hours of negotiations – has also yet to be decided, while the European commission will only present proposals for "an enhanced and permanent presence" of debt inspectors in Athens later this week.
Repeatedly conceding that their forecasts were subject to high risks, the officials said the Greek economy would contract by 4.5% this year after a fall of 7% last year and would stagnate in 2013 before growth resumed in 2014.
Unemployment, now running at more than 18%, is expected to remain above this level this year and next, be just below 17% in 2014 and remain above 15% in 2015. But wages will have to be depressed even further to reorientate the Greek economy towards exports.
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