comeback to financial markets slide 3 in order to address the remaining challenges, to improve the future growth prospects of the greek economy, and to ensure a comeback to financial markets in 2018, several conditions should be met. a. implementation of 2nd review reforms first and foremost, following the closure of the second review, it is necessary that there is a smooth and timely implementation of the agreed growth enhancing reforms. delayed closing of the second review increased uncertainty and reduced confidence which, coupled with the high tax burden, reversed the positive course of economic activity in 2016 q4. as a consequence, following the mild recession in 2015, the economy stagnated in 2016. however, a positive medium - term outlook is still possible, conditional on a smooth implementation of agreed reforms. consumption is expected to continue rebound, driven by robust employment, which is recovering faster than output, pointing to a job - rich recovery. investment is projected to increase as confidence is restored and financial conditions improve. exports are projected to benefit from the benign global economic outlook and past improvements in cost competitiveness. finally, although the sizeable over - performance in 2016 is assessed to be mainly of a temporary nature, the 2017 target is expected to be met with a safe margin. moreover, rebalancing the budget towards a more growth - friendly composition would support economic recovery. b. implementation of further growth enhancing reforms to boost exports and attract fdi second, further growth enhancing reforms are needed that will boost exports and attract fdi are needed. the economic adjustment and the structural improvements during the past six years made greece more business friendly and have created significant investment opportunities. however, domestic savings are insufficient to meet the investment needs of the greek economy that, after a long period of very low investment rates, are significant. thus, besides restoring access of companies to capital markets, conditions should be encouraged to attract foreign capital, notably in the form of foreign direct investment. in order to attract both domestic and foreign investment, further emphasis should be given to reforms that improve the business environment, enhance competition and reduce excessive regulation, protectionism, bureaucracy and complex legislation. for example, investment licensing procedures need to be simplified, the administrative burden on businesses reduced, the remaining regulated professions and network industries opened up, the public administration modernised and strengthened, judicial efficiency enhanced, court proceedings speeded up and of course personal and corporate taxation lowered. additionally, a more effective use of the domestic high - skilled human capital ( and the return of high - skilled scientists and executives who

a result of these employment trends, and on the basis of consistent - across - countries assumptions on productivity growth, potential gdp growth is projected to decline in the decades to come. for the eu15, the annual average potential gdp growth rate will fall from 2. 2 % in the period 2004 - 2010 to 1. 3 % between 2031 and 2050. an even steeper decline is foreseen in the new member states ( eu10 ), because of both demographic developments and the underlying assumption that productivity growth rates in these countries will converge to those of the eu15. in greece, that convergence is also expected to lead to a fall in productivity growth, contributing to a decline in potential gdp growth from an annual average rate at 2. 2 % in the period 2004 - 2010 to below 1 % per year in the 2030s and 2040s. public spending projections population ageing is projected to lead to increases in public spending in most eu member states by 2050 on the basis of current policies although there is wide disparity in those increases across countries. in more than one third of the member states, the long - term budgetary impact of the projected increases will be at least 5 % of gdp. these countries have so far made only limited progress in reforming their pension systems or are experiencing maturing pension systems. for the new member states ( eu10 ) as a whole, the increase is projected to be much smaller, but this situation reflects mainly institutional changes. a switch to private pensions scheme in poland is expected to make a substantial contribution to a decline in public pension spending in the new member states. 4 excluding poland, age - related spending is subject to increase by more than 5 % of gdp. most of the projected increase in public spending will be on pensions, health care and long - term care. offsetting savings in areas as education and unemployment benefits are likely to be limited. with respect to greece, data on public spending projections are not available as such projections have not yet been submitted. however, according to projections prepared in 2002, pension expenditures will rise from 12. 4 % of gdp in 2005 to 22. 6 % of gdp in 2050. 5 the net increase in total old age - related expenditure ( excluding spending on long - term care, for which no official figures are available ) is projected to be 11. 5 percentage points of gdp, reaching 32. 7 % of gdp in 2050. this compares with rises in pension expenditures by slightly more than 2 percentage points