Greece might be in economic crisis mode and getting productivity levels up might take time, but there are signs of improvement according to one economist.
“We’re in a deep hole right now, both politically and economically. They’re [in Greece] trying to form a new government, they need to get going, develop a new rapport with the European Commission and the Troika as a whole. But I think economically also, the country is really now in a deep hole”, Bart van Ark, Executive Director of Economic Research at The Conference Board, told CNBC.
Speaking on “Squawk Box Europe”, van Ark said that though The Conference Board, which is an independent provider of global business research, adjusted its forecasts of projections for Greece and the whole of sovereign Europe downward quite significantly for the remainder of 2012, there could be light at the end of the tunnel.
“This might actually begin to be a trough. Even though we adjusted [the] GDP numbers downwards we also see some positive things like improvement in unit labor costs, a little bit more competitiveness in the economy, so maybe it’s a start” he said.
Van Ark said though it would take time for the Greek economy, and others in peripheral Europe such as Spain and Italy, to recover productivity when global growth and demand was low, there were signs of healing.
“Productivity takes a long time. It’s not something that you’re going to recover [from] overnight. But some of the immediate and very painful effects that we’re seeing now, such as rapid decline in labor costs, actually improves the unit labor costs of these economies and that can be the beginning. It’s not enough, but I think we may want to look for some positive signs that these economies are now starting to go through a trough” he said.
Global markets and politicians will also be looking for positive signs that Europe’s economic prognosis will improve on Wednesday as a Greek government is expected to be formed. New Democracy, who narrowly won the vote in Greece’s elections on Sunday, is expected to announce a coalition government backed by the PASOK Socialists and the smaller Democratic Left party, before going to euro zone officials to re-negotiate the country’s bailout.