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The Greek Economy

(GREEK NEWS AGENDA)   According to the latest reports on the Greek economy published by the International Monetary Fund (IMF) for 2007 (30.4.2008) and European Commission’s spring forecast, 2008-2009  (28.4.2008), predictions are temperately optimistic, despite a difficult and stressful world economic environment. In particular, for 2008, the IMF estimates that economic growth will reach 3.7%, as opposed to the Greek Central Bank’s 3.5% and to European Commission’s 3.4%. Even so, the Commission points out that a 3.4%’s growth rate is double that of the eurozone average. Furthermore, the Commission says that the deficit will be close to 2% for 2008 and 2009, while the public debt is estimated to decrease to 92.4% for 2008 and even further to 90.2% in 2009. Inflation will rise to 3.7% for 2008 as opposed to 3% of the previous year and to 3.6% in 2009. The IMF encourages Greece’s planning for balancing the books by 2010 and insists on neater tax administration and collection, as well as restrained public spending.    

Concerning unemployment, the Commission estimates that the rates will remain unaltered at 8.3% for 2008, decreasing to 8% in 2009. By and large, the IMF is strongly suggesting that Greece boost its competitiveness. The report proposes privatisations in infrastructure, and licensing simplifications. Lastly, the IMF report delves into the Greek labour market advising for a bold deregulation. Both institutions urge the Greek government to enhance its reforming programme and reinforce it even further. 

Commenting on the Commission’s report, Finance Minister George Alogoskoufis pledged to keep the deficit at 2% this year and fully execute the budget as it is, noting that the Commission’s report does not include any recommendations for new, additional measures. Due to its economic policies and structural reforms over the past years implemented by Alogoskoufis, it looks like Greece is weathering for the moment the storm of gloomy economic prospects.

Kathimerini daily: IMF says Greece Needs to Boost Reforms & Gov’t Still Confident on Fiscal Targets; Athens News Agency: Commission on Greek Economy; European Commission: Macro-economic forecasts- Spring Economic Forecast 2008-2009; see also Greek Economy and Markets – Issue 9, February 2008; Greek News Agenda: The Greek Economy-Pointers & Bank of Greece Annual Report