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Will 2014 be the year Greece starts growing again?



After six years of crippling recession, Greek officials are hopeful that the country's economy will grow in 2014—despite continuing sky-high unemployment and falling prices.

"I feel quite comfortable overall about the prospects of the Greek economy. We've succeeded after about six years to establish positive growth," Kyriakos Mitsotakis, the Greek Minister of Administrative Reform, told CNBC on Thursday.

Greece was first hit hard by the global financial crisis in 2008 and then ran into trouble paying down its debt in 2010. The country was bailed out by the rest of Europe and the International Monetary Fund, but hopes to graduate from its loan program in 2016 without further assistance—just as Ireland and Portugal did this year.

However, deflation and sky-high unemployment in Greece remain open sores—over one-quarter of Greeks remain jobless and the European Commission forecasts price levels in the country will fall by 0.8 percent this year.

Nonetheless, the European Commission forecasts Greek gross domestic product will rise by 0.6 percent this year and 2.9 percent in 2015. Some are less optimistic, with global consultancy EY expecting a contraction of 0.3 percent this year.

Mitsotakis spoke to CNBC from Paris, where Greek officials are meeting with "Troika" of international organizations managing Greece's bailout program – the European Commission, IMF and European Central Bank -- to discuss progress in meeting fiscal reduction targets. Greece hopes to convince the Troika to allow it to cut taxes, given that it is on track to meet the targeted primary budget surplus of 1.5 percent this year.

Given Greece's deflation, Mitsotakis said there would be justification for the European Central Bank to introduce more measures to boost price growth in the euro zone—which stood at 0.3 percent in August. Federal Reserve-style quantitative easing (QE) has been mooted by analysts at the likes of Deutsche Bank, ahead of the central bank's rate decision and regular press conference on Thursday.

"Mr Draghi himself implied that unconventional measures may be necessary to bring Europe out of this deflationary situation, said Mitsotakis. "We've seen from other countries how difficult it is to actually break that vicious cycle."

—By CNBC's Katy Barnato

Contact World Economy

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