George Alogoskoufis

English translation and adaptation of an article in Greek, published in the newspaper TA NEA, December 5, 2020

An important report of the so-called Pissarides Commission was recently presented to the Prime Minister of Greece and made public for wider discussion. This report, written by four distinguished academic economists headed by the Nobel Laureate, LSE economist, Chris Pissarides, analyzes the main characteristics and trends of the Greek economy, the global and European trends that will affect its future course, as well as the general direction in which economic policy should move in the future. The report focuses on policy reforms for a sustainable recovery of the Greek economy, without the imbalances, distortions and lapses of the past.

The adjustment programs of the last decade, despite the huge costs that they have heaped upon the Greek economy, have not created the conditions for a sustainable recovery from the great economic depression that they have caused.

The data on the evolution of real and potential GDP in Greece, published by the European Commission (see graph), are an infallible witness to this. While both real and potential GDP showed an upward trend between 1990 and the outbreak of the Great Recession of 2008-2009, after the recession and the great depression of the Greek economy caused by the adjustment programs of 2010-2018, actual GDP remained below its potential, which itself displays a persistent negative trend even before the outbreak of the 2020 coronavirus crisis.

Source: EU Commission, AMECO Database (November 2020). GDP measured in billion 2015 euros. Logarithmic scale.

It is therefore certain that, in parallel with the efforts to deal with the current crisis caused by the pandemic, deep structural reforms are needed in order to create the conditions for a dynamic recovery of the Greek economy and its productive potential. Enriching the reflections on these reforms is perhaps the most important contribution of the Pissarides Commission report.

Along with domestic reforms, there is also an urgent need for further and much more ambitious reforms of the rules and operation of the eurozone itself.

Unfortunately, the first reactions of the opposition parties in Greece to the presentation of the Pissarides Commission report are once again disappointing. They rejected it immediately, without presenting any credible alternative proposal.

This report is not a panacea. However, it is a very good basis for a much needed political and social dialogue to formulate a national reform program for the recovery of the Greek economy. A program that must be formulated consensually and be endorsed by the widest possible range of political forces in the country. Consensus is a necessary condition for continuity, credibility and effectiveness of any medium term reform program. The same consensus is required for putting forward Greek national positions for necessary reforms at the level of the euro area.

If Greece learns from the political bickering and controversies of the past, which have caused so much suffering, and if a minimal political consensus is formed around some of the key issues regarding the necessary reforms, the dynamic recovery of the Greek economy after the current crisis is possible. Otherwise, any results will be meager and temporary, and the Greek economy will not be able to escape the vicious circle of recent decades.

Link to article in Greek in ΤΑ ΝΕΑ

Link to Full Pissarides Report (in Greek)