SEV officials spell out dangers of lower investment

Officials of the Federation of Greek Industries (SEV) warned yesterday that a decline in investment over the past few months is a grave cause for concern over the prospects of the Greek economy since it is not merely a result of uncertainty over a likely war in Iraq but has deeper causes. SEV Chairman and Executive President Odysseas Kyriakopoulos told reporters yesterday that the decline in investment was only partly due to an international climate of uncertainty over the effects of a war in Iraq, although he admitted this in itself made new investments more difficult. «Everyone is taking a wait-and-see attitude,» he said. However, Kyriakopoulos added, a number of factors specific to Greece and more lasting than the international markets’ temporary state of anxiety were an ever-greater obstacle. The absence of serious incentives for domestic and international investors, the rising labor costs that sap the Greek economy’s competitiveness, the excessive red tape that inhibits the creation of new businesses and the inability to raise funds cheaply on the Athens Stock Exchange, now in its 41st month of almost continuous decline, are all serious disincentives to new investment, Kyriakopoulos said. «There is a sense of poverty that… affects demand,» said SEV Vice President Theodoros Fessas, adding that this climate also hurt investment. Fessas called on the State to become «the main driving force behind investment» by making faster progress in getting funds set aside by the European Union as part of the Third Community Support Framework. Asked about the recent decision by Alpha Bank to raise interest rates on loans and credit cards, Kyriakopoulos said that the move is an effort to compensate for lost revenue from currency exchange that the introduction of the euro brought about and, more importantly, to make up for the absence of serious business on the Athens Stock Exchange and the foregone commissions. He estimated that other banks would follow Alpha soon, despite assurances to the contrary, because they are under intense pressure to improve their profitability. On the other hand, he said, such a move would cause a slowdown in the growth of consumer loans. Kyriakopoulos also commented on export-promotion measures announced earlier in the day by Economy and Finance Minister Nikos Christodoulakis. He criticized them as incoherent and ultimately costly to enterprises, adding that Greece does very little, compared with similar countries, such as Portugal, to promote exports.