ECONOMY

Greek economy is bearing up well

The Greek economy proved itself far more resilient to the general global slowdown and the fallout from the September 11 events than the rest of the eurozone, as demonstrated in the marginal decline in the business climate index in October, the Foundation for Economic and Industrial Research (IOBE) announced yesterday. The economic think tank said business confidence edged down to 101.6 points last month from 101.8 points in September, noting that the decrease was smaller than the overall decline in the eurozone in the same month and in the European Union. The EU index fell by a whole percentage point to 99.3 points. Based on these comparisons, it appears that the Greek business climate is less affected by the economic slowdown evident since the early months of this year and especially by the new situation after September 11, it pointed out in its October survey. IOBE’s figures showed the local business climate index outstripping the EU and eurozone equivalents from May onward. While the European figures have worsened and returned to the average figures of the last decade, the Greek index has managed to stay above the 100-point mark. The think tank attributed October’s marginal slide to the dent in consumer confidence, which was greater than among businesses. It said the real economy has not been affected as much as the change in pyschology brought on by the general uncertainty might suggest. The robust mood among businesses will be welcome news to the government, which is banking on a massive influx of private investments to maintain the country’s projected high growth this year and in 2002. Strong investment growth underpinned the substantial surge in gross domestic product in the first half of the year. A 11.3-percent jump in investment spending in the second quarter of the year lifted first-half GDP by 5.5 percent year-on-year. The State is also looking to raise 3.5 trillion drachmas from the private sector over the next five years to match EU structural funds allocated for a number of major infrastructure projects. The strong business confidence comes amid government efforts to improve the climate with proposed tax breaks, incentives and legislation to improve the institutional framework as part of a strategy to enhance Greek competitiveness. Economy and Finance Minister Nikos Christodoulakis is due to present his tax reform proposals to the Cabinet today, the majority of which are expected to help the business sector. IOBE’s survey also showed the different reactions between the various sectors to the current economic slowdown. The business expectation index showed restrained optimism, staying close to the average yearly figure. Exporters to the EU and the Balkans were the most confident. Business expectations in the construction sector stabilized while retailers appeared to be hoping for an improvement as they placed more orders with their suppliers.