OECD’s ‘gloomy’ report

The Organization for Economic Cooperation and Development (OECD) has issued a 3.7-percent real gross domestic product (GDP) forecast for Greece this year, which is expected to rise to 4 percent in 2002, the National Economy Ministry said yesterday as it released part of a report drawn up by the Paris-based think-tank following a three-day visit to Athens last week to check on Greece’s economic progress. While the OECD’s projections appeared to suggest that it believes the Greek economy will be hit hard by the global slowdown precipitated by the September 11 attacks on the USA, Greece’s 2001 growth forecast is the second highest in the eurozone after Ireland. Greece is expected to surge past Ireland next year, giving it the distinction of having the highest growth rate in the region, which will be a first in its postwar history. The OECD also predicted a 1.6-percent growth rate for the eurozone this year and 1.4 percent in 2002. In contrast, the European Commission’s report on the economic consequences after September 11 released yesterday suggested a growth rate of around 1.5 percent for the region. The Paris body’s assessment for Greece this year appears to be unreasonably gloomy, said EFG Eurobank Ergasias economist Platon Monokroussos. The forecasts are a bit on the weak side, he said, noting that there have been no indications so far to justify such a major economic slowdown. All the signs in the first six to seven months of the year have been very strong. The latest were the July retail sales figures [out on Wednesday] which showed an 8.4-percent jump. Monokroussos said a 4-percent estimate for this year is more logical. He sees growth dipping below 4 percent next year as Greece battles with the impact of the global slowdown. Official optimism over high growth prospects have remained undaunted despite a slew of revisions by other countries. Germany yesterday became the latest country to downgrade its growth forecast for this year as its government cited the fallout from the attacks on the USA. The government has attempted to deal with the global uncertainty by drawing up two scenarios for the 2002 budget. The first draft sees GDP growth at 4.6 percent this year and next, while the worst-case scenario puts this year’s growth at 4.5 percent and 4 percent in 2002. National Economy Minister Yiannos Papantoniou on Wednesday appeared to suggest that the alternative projections are fast gaining legitimacy as he pointed to the possibility of the economy growing at 4 percent in 2002. The government will draft final estimates by November 5.

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