OECD: Greece to stay in recession in 2014, may need new bailout

Greece will remain mired in recession in 2014 for a seventh straight year, and is likely to need more financial assistance, the OECD said on Wednesday, in contrast to forecasts by Athens. The Organisation for Economic Cooperation and Development said the Greek economy would contract by 0.4 percent, and said Greece was likely to need additional aid. "The need for further assistance to achieve fiscal sustainability cannot be excluded," the OECD said. "If negative macroeconomic risks materialise...serious consideration should be given to further assistance to achieve debt sustainability," it said. Greece last week unveiled a budget in which it said the deep recession in the economy would end next year with 0.6 percent growth, following a 4.0-percent contraction in 2013. But the budget was tabled without Athens having reached a full agreement with auditors from the International Monetary Fund, the European Central Bank and the European Commission. In a separate study, the OECD said Greece's crisis-hit economy could gain by at least 5.2 billion euros ($7 billion) if hundreds of trade restrictions were abolished. The organisation said it had found 555 regulatory restrictions that were "potentially harmful" to competition, in a study commissioned by the conservative-led Greek government. The sectors examined were food processing, retail trade, building materials and tourism, which account for 21 percent of the Greek economy and almost 27 percent of total employment, according to 2011 figures. "If the particular restrictions are lifted, the OECD has calculated a positive effect to the Greek economy of around 5.2 billion euros," the organisation said. "But the positive effects on the Greek economy over time are likely to be far greater," it said. Among the recommendations are the full liberalisation of Sunday trade, which is currently restricted to a handful of pre-holiday sales periods. The move is opposed by Greek trade associations on the grounds that most businesses are family-operated and are unable to hire more staff owing to persistently poor sales, made worse by recession and three years of tax increases. The OECD also suggests the abolition of axes on advertising, flour and cement and the liberalisation of prices for over-the-counter medicine and dietary supplements. The coalition government of conservative Prime Minister Antonis Samaras is attempting to push through legislation liberalising the trade and labour sectors. But the government has a slim majority in parliament and faces the threat of internal dissent, in addition to frequent strike action from unions.