Greece rejects gloomy FT view

Says projection of sharp downturn not corroborated by international organizations

The government said yesterday that the strong points of the Greek economy outweighed the risks posed by a record current account deficit as set out in a gloomy Financial Times (FT) article authored by Ralph Atkins and Kerin Hope.

“(The article) creates mistaken impressions that do not do justice to the Greek economy. Besides the current account... there is a series of other indicators that register a positive course and optimistic prospects for the Greek economy,” said Economy Minister Giorgos Alogoskoufis in a response letter to the newspaper.

He noted that reports by the European Commission and other international economic organizations project Greece as continuing to enjoy high growth rates and unemployment as remaining on a decline.

“The European Commission estimates that the growth rate of the Greek economy will be 3.4 percent this year, against an average of 1.7 percent in the eurozone... It is seen as staying at the high level of 3.3 percent in 2009. The Commission also predicts that employment will continue rising, while unemployment will fall further this year and in 2009 by one percentage point to below 7.5 percent, contrary to what the article says,” said Alogouskoufis.

The FT article, titled “Greeks set to pay price for feel-good factor,” warned that Greek unit labor costs have risen much faster than in the rest of the eurozone, undermining competitiveness, and recent figures suggest that a marked slowdown in activity is already under way.

“GDP growth has slowed for three successive quarters... Even a soft landing would push up Greece’s jobless rate, currently at about 8 percent – the lowest since records began, although still above the eurozone average,” stated the article.

Alogoskoufis said the country’s high current-account deficit, which reached a record 14 percent of GDP last year, “largely reflects the high levels of private and public investment, which bolster the economy’s productive and export base.”

The FT said that generous handouts from the European Union, a recovery in tourism, expansion into Balkan markets by Greek companies and a shipping boom had contributed to the Greek “feel-good” factor so far.

“But the risk now is that wage growth, consumer spending and business investment will bear the brunt of an inevitable adjustment process... Analysts say a sharp slowdown could result in an exodus of Greek workers to Western Europe for the first time since the 1960s,” concluded the article.

Alogoskoufis said such a claim of a labor exodus “cannot be substantiated, particularly in view of the large wave of economic migration to Greece in recent years.”