ECONOMY

Falling exports jack up 2002 trade deficit by 2.3 percent

Greece’s trade deficit widened by 2.3 percent from January to December last year, according to customs-based data released by the National Statistics Service (NSS) yesterday, underlining once again Greece’s competitiveness – or lack of it. Analysts said domestic weaknesses coupled with the war in Iraq and the slowing global economy could put further pressure on Greek trade and lead to the trade deficit expanding even more this year. The NSS statistics echoed similar dismal figures publicized by the Bank of Greece last month which showed a larger trade deficit in 2002 resulting from fewer Greek products being sold abroad even as companies bought more foreign goods to satisfy robust demand. Excluding oil products, last year’s trade deficit rose by 3.1 percent to 15.99 billion euros, the NSS said. The jump in the deficit came as exports fell by a sharper pace than imports. Non-oil exports to EU countries stagnated at the previous year’s level, as the recession in Greece’s major trading partners forced companies to put their investments on hold and consumers to cut back on spending. While the global economic slowdown has had an impact, the figures «to a large extent reflect a loss of competitiveness in the Greek economy,» said Miranda Xafa, economist at Eurozone Advisors. She said Greece’s above-average inflation, 1.5 percent higher than the eurozone average, is making local products more expensive abroad. The government last month announced measures to boost exports by one percentage point over the next three years, key of which is the targeting of new markets in the East, setting up offices abroad to promote Greek products and reduce red tape for exporters. Xafa suggested intensifying competition in the domestic market could be a more effective tool in spurring exports. This would entail boosting the powers and independence of the Competition Committee, she said. And opening up the energy market would go some way toward addressing the issue. «At the moment, deregulation remains on paper. Without any decision on prices, private operators cannot put together any business plan,» she said. EFG Eurobank Ergasias economist Platon Monokroussos said the recession-hit economies in the eurozone and an expected rise in the trade-weighed euro this year could hamper efforts to bring the trade deficit under control. EU Economic and Monetary Affairs Commissioner Pedro Solbes yesterday suggested a prolonged war could delay a recovery in the region. The EU has said the war could plunge the eurozone into a recession. The International Monetary Fund and the Organization for Economic Cooperation and Development early this week warned of the perils of a lengthy war. «The underlying trend shows the trade deficit deteriorating,» said Monokroussos.