New York University Nouriel Roubini said that austerity measures and structural reforms being imposed on Greece will only worsen the country’s recession and make its debt levels unsustainable.
“If you have to reduce wages and pensions, you reduce demand and disposable income” which creates a vicious circle, Roubini said at a conference broadcast live on Skai.gr in Athens Tuesday. “Structural reforms in the short term will only make the recession worse so the debt ratio will become larger and the debt dynamics unsustainable.”
Greece needs to restore growth and competitiveness and the only real way to acheive this and to reduce debt is to have a devaluation with an exit from the eurozone and a return to the drachma, Roubini said.
“Even after the restructuring of Greece’s debt agreed to today, the country won’t have growth, and it’s easier to do structural reforms with growth.”
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