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

Rev · 1st December 2006, 07:38

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

skylinearth · 9th December 2006, 09:49

Great news

skylinearth · 28th December 2006, 06:58

Quote:

FinMin optimistic about economy in 2007

The consolidation of fiscal reform, reinforcement of the development process and greater social cohesion are the main characteristics of the economy for 2007, Economy and Finance Minister George Alogoskoufis told ANA on Wednesday.

"A mild fiscal adjustment policy and a broad reform programme aimed at dealing more effectively both with problems inherited from the past and future challenges, are being implemented since taking over the country’s government", Alogoskoufis noted. Such problems are high fiscal deficits, a very large public debt, declining competitiveness, high unemployment, particularly among the young, and the counterproductive public sector, stated the finance minister, adding that all these undermined the country’s future leading the economy to introversion and low productivity.

Dynamic growth, notable decline of unemployment, considerable improvement of public finances and greater social cohesion were achieved through the reduction of taxation rates for businesses within ataxation reform framework. In addition, more incentives for new investments were offered -particularly in the country’s regions- within the framework of a new investment law, as well as through public and private sector partnerships, new generation privatizations and a 3rd Community Support Framework reform.

Growth rate

The progress made in the economy is proven by the existing figures, Alogoskoufis added. In spite of difficulties such as high oil prices and low growth rates in the Eurozone, unemployment dropped from 11.3 percent in the first quarter of 2004 to 8.3 percent in the third quarter of 2006. Growth rate is strong, he stressed, at 3.7 percent in 2005, and 4.1 percent in the first half of 2006, while in the third quarter of 2006 it reached 4.4 percent putting to rest all post-Olympic Games recession scenarios. Competitiveness shows notable improvement based on the course of exports and the reports issued by foreign organizations.

Fiscal deficits are steadily declining. From 7.8 percent of GDP in 2004 the deficit will drop to 2.4 percent in 2007. Competitiveness in the banking system was boosted thanks to the settlement reached in the bank employees’ social insurance problem and the privatizations done by the government benefiting households, businesses and the economy in general. After many years, Greece is again on the international investment map attracting major investments. Foreign investments in the first nine months of the year reached 3.7 billion euros and are tenfold compared to the same period in 2005. The progress observed was achieved at a time when not all reform initiatives had given fruit meaning that the Greek economy will preserve its dynamic characteristics and further improve its performance.

The basic characteristics of the economy in 2007, according to the finance minister, will be the consolidation of fiscal reform with the deficit being considerably under the 3 percent limit, at 2.4 percent of the GDP, for a second year in a row. Development process will be reinforced with growth being based on investments and exports which considerably increased in the first 9 months of 2006 with a 9.5 percent and 20.2 percent rate respectively. The amended investment law passed in December offers more incentives for investments, while the funding of projects placed within the National Strategic Reference Framework will get underway in 2007 with 82 percent of them being directed to the country’s regions.

http://www.ana-mpa.gr/anaweb/user/sh...546&service=10

meow · 28th December 2006, 12:57

strange how the olympics have shaken the Greek economy and it's still struggling to recover
it seems investmets and exports have risen substantially. This will ameliorate conditions a bit
good for the Greek economy,
i wonder what'll happen in Portugal, Italy.. other relatively poor performing EU economies

Rev · 29th December 2006, 09:16

Not really, besides the deficit, which is well under control and under 3%. Unemployment has also dropped, which is another good sign. And theres going to be further investments in creating employment.
The Greek economy has not been one of the poor performing ones out of the EU bloc. Quite the opposite, it has been one of the better performers in recent years especially. That though is not to say everything is picture perfect.

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