Karatzas sees hope after 2004 Games, end of funds

Far from grinding to a halt, economic growth is set to continue in the post-2004 Olympic Games period and after 2006 when EU structural funds finally taper off, the head of the country’s largest bank said yesterday. Concerns that economic activity could see a significant slowdown as two of its driving forces – the Olympic Games and community inflows – come to an end in 2004 and 2006 respectively, spring from a sense of unfounded insecurity, Theodore Karatzas, governor of National Bank, said. «Focusing on external factors and ignoring indigenous growth factors only points to our unfounded insecurity,» he said at a conference on the Greek economy. The question of what will happen to economic activity once these two major sources of growth dry up has been occupying economists and industrialists alike. Ongoing infrastructure projects related to the 2004 Olympic Games and inflows of EU structural funds, amounting to a hefty 21 billion euros over a six-year period, have given and are expected to give a strong boost to the Greek economy in the next few years. Based on latest National Statistics Service data, economic expansion in the third quarter of the year came to 3.6 percent, strengthening expectations that Greece could overshoot its already ambitious 3.8 percent target this year. Karatzas’s optimism echoed that of Finance Minister Nikos Christodoulakis, who a day earlier sought to discredit the doomsayers. Greece plans to follow in the footsteps of Barcelona, hosts of the 1992 Olympic Games, which successfully built on the event, he said. Skeptics should take a look at the shipping industry, a sector in which Greece has gained prominence as a result of hard work and talent. Shipping activities generated close to 4 million euros in foreign exchange in 2000, reducing the Greek trade deficit by a fifth, Karatzas said. The spate of ongoing infrastructure projects will upgrade the capital’s infrastructure and reinforce its capability for the future, he said. Karatzas also warned against any loosening of the Stability and Growth Pact. «A high-debt country like Greece needs the fiscal discipline set out under the pact for the security of its future,» he said. The government similarly has stressed its opposition to any tinkering with the pact, which has come under strain in recent months due to the deficits expected to be posted by the three largest eurozone economies this year. Karatzas took a shot at the haphazard and unplanned nature of the construction industry, with its negative impact on the economy and the tourist industry. The implementation of a regulatory framework which takes into account building and environmental needs would help to attract high-tech and value-added investments, he said.

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