Exclusive: Greek budget to forecast economic rebound in 2017 - source

September 29, 2016 8:45 AM EDT

A piggybank painted in the colours of the Greek flag with a 20 euro banknote in it's slot, stands amongst various euro coins in this picture illustration taken in Berlin, Germany June 30, 2015. REUTERS/Pawel Kopczynski

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By Lefteris Papadimas

ATHENS (Reuters) - Greece is forecasting 2.7 percent economic growth next year, its first rebound after seven years of crippling recession, as investment picks up and tourism surges, a government official familiar with the draft budget said on Thursday.

The recipient of three international bailouts, Greece's economy has shrunk by a quarter since its debt crisis exploded in 2010, forcing it to adopt harsh austerity, throwing millions out of work.

The 2017 budget is due to be tabled in parliament on Monday.

The economic growth forecast compares with a 0.3 percent contraction in 2016 anticipated by the lenders.

The Greek economy expanded by 0.2 percent in the second quarter. It was the first quarter-on-quarter expansion since late 2015 and followed a 0.2 percent contraction in the first quarter.

While Athens has managed to fix its twin imbalances - its primary budget and current account deficits - over the last six years through painful fiscal adjustment, economic output has been stagnating and unemployment remains high.

Under the 86 billion euros ($96 billion) bailout deal clinched in mid-2015, Greece must achieve a surplus, excluding debt servicing costs, of 0.5 percent of GDP this year and 1.75 percent in 2017.

"The primary surplus will exceed the bailout's target of 0.5 percent this year," the official said, adding that the budget draft would probably not include a specific figure.

He added that the draft will project a primary surplus of 1.75 percent of GDP for next year in line with the bailout.

The most indebted country in the euro zone would see its debt pile falling to 175.8 percent of output next year, compared with about 180 percent of gross domestic product this year. Authorities say they anticipate negotiating a deal in coming months with lenders on debt relief.

Government officials say growth will be generated through a string of investments under the country's privatization program. That plan is expected to reap some 5.8 billion euros in revenue by 2018, while unemployment is expected to slightly ease and tourism earnings were expected to rise by between 1 and 2 percent to around 15 billion euros in 2016.

"We are already seeing increasing signs of recovery in domestic investment ... (and) public investment is expected to continue to draw support from a number of public projects," said Platon Monokroussos, an economist from Eurobank.

(Editing by Michele Kambas and Mark Bendeich/Jeremy Gaunt)

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