Photographer: Tomohiro Ohsumi/Bloomberg

Grexit Fears Cause GDP Forecasts to Plummet

We surveyed economists on Greece's GDP growth this year and next year

Economists have severely cut their forecasts for core Greek economic indicators. That reflects growing concern that the debt burden of the southern European country may force an exit from the euro as its creditors grow frustrated with the lack of a clear vision from Syriza party leader and Prime Minister Alexis Tsipras, and the absence of a compromise on bailout terms.

Greece will grow just 0.5 percent this year and 1.9 percent next year, according to a survey of 19 economists conducted by Bloomberg from April 10-16. That is among the slowest of all euro-area countries. It compares with forecasts of 2 percent and 2.5 percent for this year and next year, made in January. The expected weakening of Greece's core economic fundamentals doesn't end there, with economists forecasting prices to fall by 1.6 percent this year and rise by just 0.4 percent in 2016. That compares with forecasts of minus 0.6 percent and positive 0.7 percent made last quarter

Instability in Greece is also putting pressure on the labor market, with unemployment expected to rise to over a quarter of the labor force this year, and continue at a similar rate next year.

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