ECONOMY

Oil spike jacks up January current account deficit

Greece’s current account deficit rose 34 percent year-on-year to 1,284 million euros in January on the back of rising oil prices and lower EU funds, provisional statistics released by the Bank of Greece yesterday showed. The surge in oil prices, up 37 percent since December, sent the trade deficit higher by 105 million euros to 2,079 million euros in January. The oil spike was also chiefly responsible for a 951-million-euro increase in last year’s current account deficit to 9,210 million euros. Discounting the oil bill, the trade deficit in January showed a marginal improvement, declining to 1,559 million euros from 1,645 million euros in January last year. Exports contracted 3.84 percent as Greece’s major trading partners cut back on their purchases in the face of a recession, while imports, fueled by strong domestic growth, rose 2.42 percent. The National Export Council, meeting yesterday, said it will review a number of measures to help export companies counter the fallout from a war in Iraq. These include the State refunding VAT payments to exporters on the same day, tying exports to the 2004 Olympic Games, resolving technical problems at customs and setting up an online information system. The Finance Ministry is targeting a 1 percent annual increase in exports as a percentage of GDP. Christos Avramides, economist at Proton Investment Bank, said it was still too early to draw conclusions, but that barring a lengthy war in Iraq, the current account deficit this year should be heading for a descent. «I’m looking for a smaller current account deficit this year although the shortfall remains a major concern,» he said. The central bank’s statistics underlined the impact of geopolitical uncertainties on the tourist industry, with travel receipts in January falling 16.45 percent to 143 million euros. The Greek National Tourist Organization last week said bookings from February until now have stagnated as war looms in Iraq. Delays in launching projects funded by community funds also prompted Brussels to ease up on the disbursement of transfers, contributing to the increase in the January current account deficit. The transfers surplus fell to 625 million euros following a 14 percent decline in general government receipts, mainly EU net receipts. «Inflows of EU transfers should increase next month as Greece steps up the pace,» said Paul Mylonas, economist at National Bank. The government last week pledged to improve and accelerate community-funded projects this year after spending most of 2002 drawing up the framework for the programs. It has set a goal of absorbing 400 million euros a month. Foreign investors’ interest in Greek bonds lifted the financial account surplus to 1,097 million euros from 860.8 million euros. Greece’s reserve assets at the end of January came to 8.4 billion euros.