ECONOMY

Q1 growth runs at faster pace than forecast for 2003

The economy expanded at a faster pace in the first quarter of the year than the projected annual growth rate of 3.8 percent, but unexpected expenditure related to bad weather earlier this year could lead to a slippage in the targeted 0.9 percent budget deficit this year, Economy and Finance Minister Nikos Christodoulakis said yesterday. «GDP growth in the first quarter was encouraging and could possibly surpass the annual growth target,» he said. The National Statistics Service (NSS) is due to release a flash estimate of first quarter growth on May 15. Christodoulakis said the buoyant growth in the first three months stemmed from robust retail sales, up 7.9 percent year-on-year in February according to NSS data out yesterday. Retail sales volume in the first two months of the year increased by an average of 8.5 percent. On the inflation front, Greece can expect to see a decline in consumer prices after the spike in the last two months due to bad weather, Christodoulakis said. «Inflation is due to ease after the sharp fall in oil prices,» he said. Consumer prices shot up to 4.3 percent in February, though the rise eased slightly to 4.1 percent in March. April figures are due out on Friday. The bad winter weather could derail Greece’s goal of a 0.9 percent budget deficit this year. «We are maintaining the targeted budget deficit this year. However, it could be slightly affected by compensation related to bad weather,» he said. Greece last week put in a request for 157 million euros from the EU solidarity fund to partially cover weather-related damage. The total loss is estimated at 312 million euros. Christodoulakis also sought to defend the government’s financial record, saying revenues and spending in the first quarter were generally on track. Regular budget revenues edged up 2.3 percent and primary spending 25.2 percent in the first quarter, the General Accounting Office said last week. «First quarter expenditure is not comparable with last year’s period because of the bad weather, and could markedly exceed last year’s spending,» he said. Expenditure is expected to fall back to more normal levels in the coming months. Revenues, on the other hand, rose 11.5 percent in the first four months, more than two-and-a-half times the annual target, he said. He said the 2002 budget, concluded recently, improved on projected revenue and spending goals. The government raised an additional 74 million euros last year, bringing the total to 37.1 billion euros. Spending, which includes interest payments, increased 4.6 percent against a targeted 4.7 percent to 37.43 billion euros. The regular budget deficit came to 0.2 percent of GDP.