mainly due to the adverse carry - over effect from 2015. according to the elstat ’ s flash estimates released today, gdp shrank by 1. 3 % year - on - year in the first quarter of 2016. the necessary conditions for a gradual recovery of the economy in the second half of 2016 are a further improvement in confidence, an enhancement in the liquidity of the banking system and a further relaxation of capital controls. however, a deterioration of the refugee crisis could have negative repercussions on tourism and trade. in more detail, household consumption expenditure is expected to decline in 2016, reflecting the increased tax burden. the recent data on the volume of retail sales are alarming, showing, as already mentioned, a 6. 6 % fall year - on - year in february. on the other hand, investment and exports are expected to pick up gradually and in line with the restoration of confidence and of credit flows to the economy. the successful completion of the first review is crucial for the gradual recovery of the economy in the second half of 2016 the successful completion of the first review of the programme will definitely improve confidence and the recovery prospects of the economy in 2016. it is the key to the return of deposits to the banking system and will pave the way to : ( i ) the reinstatement of the waiver for greek government bonds by the eurosystem, which will enable greek banks to obtain low - cost funding from the european central bank ( ecb ) and ( ii ) the inclusion of greek government bonds in the ecb ’ s quantitative easing ( qe ) programme. the reinstatement of the waiver and the ensuing cheaper refinancing of greek banks, coupled with the inclusion of greek government bonds in the ecb ’ s qe programme, are expected to have a significant positive impact ( potentially amounting to about €400 - 500 million ) on banks ’ results over the next year. however, the indirect effects, such as the upgrading of the credit ratings of the greek government and greek banks, are expected to be much stronger. furthermore, the completion of the first review could lead to the implementation of the eurosystem ’ s commitment to pay greece the profits from greek government bond holdings excluded from the psi. this commitment has been suspended due to the non - completion of the last review of the previous programme. the so - called anfa / smp revenue available to be released, in the order of €10 billion up to 2020, could

have been ineligible since the country was not “ in a programme ”. thus financial conditions in greece have not benefited significantly from the raft of nonstandard measures that have been introduced during the crisis. conditions, however, can be expected to improve with the passing of the 1st review and the reinstatement of the waiver. d. the response of the greek authorities, including the bank of greece i now turn to the response of the greek authorities. the role of central banks throughout the eu has been considerably increased due to the challenges faced by banking systems in the wake of the lehman brothers ’ failure. one manifestation of this increased role is that mandates have been amended to explicitly refer to financial stability as a core central bank task. at the same time, the toolbox available has been expanded to include macro - prudential policy tools and enhanced micro - prudential policy tools both for the ssm and the national authorities. the greek authorities are no exception to this trend. throughout the crisis, the bank of greece has been the guardian of financial stability, protecting fully all depositors ( regardless of type and size ) and supporting the economy and the public interest. initially, this was accomplished through the 2008 law which provided capital support to greek banks and allowed banks to issue government guaranteed bonds which could be used in refinancing operations. similar laws were enacted throughout the eu. with the onset of the sovereign debt crisis, however, the situation intensified requiring continuous action by the bank of greece on two broad fronts : ensuring adequate provision of liquidity and managing recapitalization, resolution and restructuring. with respect to liquidity provision, the bank has been critical in ensuring continuous liquidity provision to banks using one of the oldest macro - prudential tools available, that of the lender of last resort. on various occasions, the bank of greece has extended ela to the banking system. this has helped preserve financial stability by ensuring that liquidity problems do not turn into solvency problems. with respect to managing recapitalization, resolution and restructuring, the bank ’ s strategy, in the context of the adjustment programmes, aimed at strengthening viable institutions and winding down non - viable institutions whilst safeguarding financial stability. to this end, viability assessments and capital needs assessments were undertaken. those banks deemed viable were recapitalized. the first round of recapitalization, following the losses incurred from psi, was completed in june 2013. a combination of both private capital and resources from the hellenic