Thinktank wants Greece to tackle 555 regulations hindering growth in retail, food processing, building materials and tourism sectors
Shops in Greece must be free to offer buy-one-get-one-free deals and determine their own product sell-by dates as part of wide ranging reforms to regulations that have prevented the debt-stricken country from recovering after the financial crash, according to a leading thinktank.
The Organisation of Economic Co-operation and Development (OECD) said a bonfire of harmful regulations restricting trade and investment in four key industries was needed to create a more vibrant economy and foster growth.
The Paris-based thinktank wants Greece to tackle 555 regulations hindering growth in the retail trade, food processing industry, building materials sector and tourism.
It said the industries, which account for more than one-fifth of the economy, would generate €5.2bn (£4.3bn) in extra activity once the measures were implemented.
The report came as the OECD predicted Greece's debt would stay above 160% of GDP until 2020, almost 35 percentage points above the level forecast by its EU/IMF lenders in July.
A steep fall in prices is behind much of the country's deepening debt problem. A forecast 12% fall in prices more than previously predicted would hurt growth and push the debt to GDP ratio higher.
"About two-thirds of this difference reflects the assumed larger deflation," the OECD said. "Deflation pressure may be stronger and last longer than expected."
Greece is in its sixth year of a recession exacerbated by the austerity measures attached to its multibillion euro bailouts Prices moved into deflationary territory for the first time in over four decades this year.
"If negative inflation risks materialise, assistance from Greece's euro area partners may need to be considered," the OECD said.
The thinktank is the only major international organisation forecasting a seventh consecutive year of recession for Greece in 2014 – it forecasts the economy shrinking by 0.4%.
Athens and its lenders expect GDP growth of 0.6% next year. The slump has shaved about a quarter off economic output.
Risks to real growth are "still on the downside" even if the country fully implements all the reforms imposed by its lenders, the OECD said.
Reform measures could also drag prices lower, but the overall effect would be expansionary as new entrants into sclerotic industries, increase overall activity, it said.
Kostis Hatzidakis, Greece's minister for development and competitiveness, said that while the Greek economy has stabilised, there was widespread agreement that the country's "dwindling competitiveness" was restricting the recovery.
"It is true that our economy has been plagued by bureaucracy, protectionism and market distortions for a long time," he said. "Our efforts have focused on generating growth by implementing and enhancing structural reforms, and not just by fiscal consolidation.
"Two necessary conditions for these structural reforms are to improve our competitiveness and to build a new, investment friendly, business environment."
Horst Reichenbach, the head of the taskforce sent by Brussels to oversee Athens' use of EU loans, said he wanted Greece to press ahead quickly to remove obstacles "that will have significant effects".
At the moment shops must gain clearance from public officials to offer discount deals. Sell-by dates on milk and other foodstuffs are also set by the Greek authorities.
Among 329 recommendations, the OECD report said price restrictions also hampered competition in the tourism industry, which must submit cuts in nightly room charges to local public officials or trade associations. Licensing requirements that prevent new entrants to all four iundustries must be repealed to allow greater competition, it said.
The report, which said the recommendations needed to be implemented in full to reap the benefits, said: "Such benefits generally take the form of lower prices and greater choice and variety for consumers. Often this will result from entry of new, more efficient firms, or from existing suppliers finding more efficient forms of production under competitive pressure."
OECDGlobal economyGreeceEuropeEurozone crisisEuropean UnionEconomicsRetail industryThinktanksPhillip Inmantheguardian.com © 2013 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds |
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