yannis stournaras : the greek economy and the contribution of tourism to growth speech by mr yannis stournaras, governor of the bank of greece, at the conference of the greek tourism association ( sete ) " the greek economy and the contribution of tourism to growth ", athens, 17 october 2016. * * * taking stock of the programme implementation we are now a third of the way through the extent of the programme agreed in july 2015 and ending in june 2018. this agreement reoriented economic policy towards realistic goals and came up as the only solution in view of the major risks that hanged over greece in the summer of 2015. as an interim stocktaking of programme implementation, our assessment is that progress has been slow, but with expected positive results : the completion of the first review and the recent enactment of the second set of prior actions have strengthened confidence and the prospect of economic recovery. this development brought multiple benefits, which have a positive impact on liquidity and should boost economic activity in the second half of 2016. in particular, following the reinstatement of the eligibility of greek government bonds as collateral for eurosystem operations, greek banks can now have access to lower - cost refinancing from the european central bank ( ecb ), which, combined with changes in the domestic banking system, can translate into lower borrowing costs for businesses. moreover, the dissipation of uncertainty, the stabilisation of private sector deposits and the progress made with the restructuring of greek banks have enabled since early june 2016 successive reductions of the emergency liquidity assistance ( ela ) ceiling for greek banks, by €16. 3 billion in total, so that the ceiling currently stands at €51. 8 billion. the above developments, coupled with the lifting of restrictions on cash withdrawals when the funds come from new deposits in cash ( new money ), should encourage, in the medium term, the return of deposits to the domestic banking system, which in turn will allow a further easing and ultimately the elimination of capital controls. the economy ’ s gradual improvement starts being reflected in the course of several macroeconomic indicators. specifically : industrial production rose by 2. 0 % year - on - year in january - august 2016, mainly due to a significant rise in manufacturing ( + 4. 8 % yoy ). in july 2016, the retail sales volume index increased by 9. 7 % year - on - year, while the seasonally adjusted retail sales volume index increased by 4

. 9 % month - on - month. according to data from the ergani information system of the ministry of labour, social security and solidarity, the balance of salaried employment flows in the private sector in january - august 2016 was positive, with the creation of 237, 817 new jobs, up by 51, 793 relative to one year earlier. data from elstat ’ s labour force survey for the second quarter of 2016 suggest a decline in the unemployment rate to 23. 1 %, from 24. 9 % in the previous quarter and 24. 6 % in the corresponding quarter of 2015. the forecasts of the bank of greece point to economic recovery starting from the second half of 1 / 7 bis central bankers'speeches 2016 and continuing in the years 2017 and 2018. specifically, a small reduction in the order of 0. 3 % in gdp is expected for 2016, followed by growth of 2 5 % and 3 % for 2017 and 2018, respectively. these forecasts are based on the assumption that the reforms and privatisations agreed between the greek government and the institutions will be implemented and the relevant fund disbursements will be completed in time, so as to support liquidity in the greek economy, and that the ecb ’ s monetary policy accommodation will remain in place. regarding the inflation outlook, the downward trend of prices is expected to bottom out in 2016 and be followed by gradual increases in 2017 and 2018. the unemployment rate is expected to keep falling in 2016, although at a slow pace that should pick up in 2017 – 2018. however, risks to the path of the greek economy remain. any delays in the completion of the second review, and particularly in the implementation of reforms and privatisations, would dampen the increase in economic activity, resulting in a resurgence of uncertainty, undermining confidence and weakening the prospects for a definitive exit from the crisis. meanwhile, there are still a number of risks and uncertainties surrounding the outlook of the european and world economy, relating to, among other things, the planned uk exit from the european union ( eu ) and a possible worsening of the refugee crisis. also, risks are posed by a potential surge of protectionism and more simplistic approaches to complex problems, on both sides of the atlantic, based on isolationism rather than cooperation and coordination. these risks could slow the recovery of the greek economy, through a negative impact on tourism and trade or a slower - than - expected decline in