would correct itself through the economy ’ s automatic fiscal stabilisers, provided that growthenhancing measures supplement fiscal consolidation { this is my ft article, january 2012 }. secondly, there is a certain misperception in the mous about how reforms would work in the economy. i identify three grey areas here : firstly, reforms take time to unlock their growth potential and their results are also country - specific. a recent study by the oecd indicates that the above time period may extend to five years or more. secondly, structural reforms work better and quicker when there is investment to take advantage of them and, more bis central bankers ’ speeches generally, demand in the economy, because the more the recession lingers on, the harder it is to get positive results by implementing structural reforms { see my wsj article, march 2012 }. an illustrative example from the recent greek experience is the liberalisation in the freight transport industry in 2012. despite the opening of the market which resulted in reduced freight transport charges, the industry did not grow as analysts had expected because of the recession and lack of demand in the economy. by contrast, the removal of cabotage restrictions in 2013 had a particularly positive impact on cruise - ship tourism in following years, because of strong foreign demand in this particular sector. last but not least, as regards the sequencing of reforms, the appropriate strategy is : product market reforms come first and are then followed by labour market reforms ( whereas in the case of greek mous the exact opposite took place ). { in my latest two - volume book “ the double sovereign debt – banking crisis ”, 2015 ) i explain all the above in more detail. } 2. on how to revive the greek economy in response to paul volcker ’ s earlier remark that greece is a relatively small country and it wouldn ’ t be difficult to achieve a turnaround of its economy, i would like to say a few words. indeed, greece is a small country, only accounting for 1. 76 % of the euro area ’ s gdp [ and just 0. 38 % of the world ’ s gdp ]. my own personal view on how to revive the greek economy from its current stalemate is the following : firstly, it is imperative to stabilise expectations as soon as possible. given the directionless economic governance of last year and the resultant huge cost of the economy ’ s backtracking ( capital controls, etc. ), this could be achieved through the timely completion

. the situation deteriorated rapidly in september 2008, following the default of lehman brothers, the large u. s. investment bank, and the rescue of a. i. g., the largest u. s. insurance company. these events prompted a huge increase in perceived counterparty risk as banks faced large writedowns. moreover, the solvency of some of the most established financial firms came into question, market volatility surged, and liquidity dried up. in effect, the entire u. s. financial system was put under severe strain. the impact of these events was felt across the global economic and financial systems, and the world economy entered its sharpest downturn since the great depression of the 1930s. a striking feature of this crisis has been the successive revisions – all in a downward direction – of global growth forecasts. to give an example, one year ago the imf forecasted that global growth in 2009 would be 3. 8 per cent. in october of last year – that is, shortly after the events of lehman brothers and a. i. g. – the imf reduced its global growth projection for 2009 to 3. 0 per cent, lower, to be sure, than the earlier forecast, but still a fairly robust rate. in january of this year, the imf again reduced its growth forecast for 2009, this time to 0. 5 per cent. several weeks ago, the imf released a new forecast. the imf now projects that global growth will turn negative – on the order of 1. 3 per cent – this year. what happened to produce such a dramatic turnaround? because the banking system was at the epicenter of the crisis, the ramifications were quickly transmitted to all sectors in all countries of the global economy, and were magnified by a collapse in business and consumer confidence. historical evidence confirms that financial crises are more likely to be followed by severe economic downturns when they are centered in the banking system and occur in the context of rapid build - ups of credit and house prices – characteristics that were features of the present crisis. adding to the strains, the turbulence exposed long - simmering internal vulnerabilities within some emerging economies, focusing investors'attention on currency mismatches on borrower's balance sheets and excessive credit growth in those economies. moreover, the severity of the crisis has been exacerbated by a corrosive feedback loop between the financial and the real sectors of the economy, which has,