. these indirect effects can, to some extent, offset the decline in demand brought about by the fiscal deficit reduction and gradually lead to economic recovery. bis central bankers ’ speeches a strategy for exiting the crisis and for sustainable growth must be implemented consistently and without delay a national strategy for the orderly reconstruction of the economy it has now become clear that the changes undertaken thus far are insufficient. both the fiscal and the external deficits remain high, implying that the country continues to live beyond its means, by relying on the financial support of its partners. major structural weaknesses in the public sector still remain, even in cases where measures to eliminate them have been legislated. market distortions undercut competition and hamper growth. whilst cost competitiveness has improved, structural competitiveness still lags. it is therefore clear that the difficult task which we have before us calls for a persistent effort over many years. recovery and growth through the mobilisation of the private business sector a strategy for recovery and growth is of utmost priority. failure to tackle the recession could compromise our ability to meet the targets of fiscal consolidation. in the current context, growth requires the mobilisation of the private business sector ; this cannot be achieved as long as the state continues to dominate the economy. nor can it happen so long as the fiscal deficit and public debt are persistently high. moreover, there cannot be growth so long as there is a climate of uncertainty and distrust exists about the prospects of the economy. the prerequisites for growth are therefore : the restoration of confidence and the elimination of uncertainty ; the creation of an environment favouring entrepreneurship ; the transfer of resources from the bloated public sector to the production of goods and services by the private sector and – more generally – from the sector of non - tradable goods and services to that of the tradable. actions for growth as early as in 2010, the bank of greece pointed out the need for a comprehensive action plan for growth, which would run in parallel with fiscal consolidation, specify needed structural policies, and provide a framework for coordinating the growth - enhancing activities of the public sector that do not put the fiscal targets at risk. such a plan is all the more urgent today. it includes the following goals : measures with immediate returns reforms to improve the business environment, including measures to deal with red tape and reduce the administrative burden on businesses, to simplify the regulatory framework, and to restore market competition. a speeding - up of the privatisation programme.

##economic aggregates for 2012 the available short - term indicators for the first months of 2012 suggest that the recession will continue this year. the bank of greece forecasts an average annual rate of decline in gdp of close to 5 % ; implying that the recession will be less pronounced than in 2011 ; this forecast assumes that the necessary structural reforms will be implemented without delay. the average unemployment rate is projected to increase this year and exceed 19 %, up from 17. 7 % last year. forecast reductions in unit labour costs for 2012 – 13, together with projected price developments, should lead to a marked improvement in competitiveness, thereby contributing to export growth and import substitution. in particular, it is estimated that by the end of 2012, two - thirds to three - quarters of the total cost competitiveness lost over the period 2001 – 2009 will have been recovered and that, by end - 2013, all of the loss will likely have been recovered. the current account deficit is projected to decrease from 9. 8 % of gdp in 2011 to roughly 7. 5 % of gdp in 2012 and that this downward trend will continue in the years to come. the downward trend in inflation will also continue in 2012, with average annual inflation expected to be around 1. 2 %. in 2013 inflation is projected to fall further, possibly to below 0. 5 %. the recession is negatively affecting expectations and fuelling the vicious circle delays with fiscal adjustment and the implementation of structural reforms, negative developments in the real economy and adverse conditions surrounding the provision of bank finance to the economy, apart from their direct impact on incomes and unemployment, are also contributing to uncertainty about the economic outlook. as long as the vicious circle of fiscal contraction - recession - uncertainty continues, the prospects for meeting deficit and debt targets will tend to weaken, thus refuelling negative expectations. some consider the vicious circle to be due to the tight fiscal policy pursued. though not without foundation, this interpretation is incomplete. it fails to take into account that, while fiscal consolidation does bring about a decrease in aggregate demand, it also affects expectations. positive expectations can be generated when : a fiscal consolidation plan convincingly forms part of a credible medium - term programme, aimed at reducing the share of the public sector in the total economy, there is strong evidence that the economic adjustment programme is likely to succeed and that its continuity is ensured, regardless of changes in the political landscape. when these two conditions are in place, positive expectations can take hold, indirectly boosting consumption and investment