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Rev · 1st December 2006, 08:38

Quote:

OECD expects firm Greek economic growth and a lower deficit in 2007

The Associated Press
Published: November 28, 2006

ATHENS, Greece: The Greek economy should experience strong growth next year along with lower deficits and unemployment, the Organization for Economic Cooperation and Development said Tuesday.
The OECD raised its 2007 growth forecast for Greece to 3.8 percent and expects the same in 2008. Its previous forecast, issued in May, had projected 3.6 percent.
The organization also said Greek budget-cutting efforts would bring the fiscal gap to 2.6 percent of gross domestic product next year, sharply lower than its previous 2007 forecast of 3.3 percent.
"OECD projections are that, on present policies, the general government deficit would be below 3 percent," the Paris-based think tank said in its annual outlook for 2007. "However, if the tax cuts announced for 2008 were to be implemented, this limit could be breached."

Greece has struggled to cut its budget deficit to below 3 percent of GDP — the highest permitted level under EU rules — after misstating its deficit for years in order to gain entry into the euro zone. It recently announced a three-year program of personal tax cuts.
The government forecasts a deficit of 2.4 percent in 2007, down from 2.6 percent this year.
The OECD forecast does not take into account the government's controversial, 25 percent upward revision of GDP earlier this year, which also reduces the deficit-to-GDP ratio. Eurostat, the EU's statistics agency, has not yet approved the revision.
The OECD also expects Greek unemployment to fall to 9.2 percent in 2007 and 8.8 percent in 2008, from 9.6 percent in 2006, and a slight moderation in inflation to 3.1 percent from 3.2 percent this year.
Still, the OECD urged "comprehensive reforms" in pensions and health care and called on the government to work toward "substantial" budget surpluses to ensure long-term stability.
"Fiscal objectives should now become more ambitious by aiming for a substantial primary surplus, given the high level of debt and favorable outlook for demand," the OECD said.

http://www.iht.com/articles/ap/2006/...ce_Economy.php