Exports start to rise, but imports rising even faster
The declining trend in exports during the past several years, which brought the value of Greece’s exports below even that of Luxembourg’s, is being reversed, according to the Panhellenic Exporters’ Association. The association had recently presented its findings to Prime Minister Costas Simitis, who said last week that the government places great importance on the Greek economy’s connection with international markets, adding that he would provide help to exporters with European Union funds available through the Third Community Support Framework and will add incentives in the revised Development Law, which is under preparation. According to data provided by the National Statistics Service (NSS) and compiled by the exporters’ association, exports are rising at an annual pace of 6.4 percent, with industrial products leading the way. The exporters believe this trend will continue over the next few months, due partly to a small depreciation of the euro. This news, however, hides a worrying development: Imports are rising even faster, at a 23 percent annual pace, pointing to a deterioration in competitiveness. «This problem is the most important one the economy faces,» the exporters said in a statement yesterday. Greece’s competitiveness gap cannot be closed soon, but requires a series of measures and the elimination of bureaucratic obstacles and disincentives, the exporters say, urging Simitis to follow up quickly on his promises. The Development Law – a law providing incentives to investors – should encourage investment aiming at producing new, high-quality products, create brands and also help build new production units that will be competitive with similar units abroad. Boosting exports also requires wider changes in the economy, like those talked about for years but never, or only partially, implemented, including social security and labor market reform. The exporters’ association focuses on «the drastic reduction of structural weaknesses – meaning, especially, rigid, heavily regulated markets – the improvement of the state administration’s effectiveness, the reduction of the burden on enterprises and the creation of an environment more likely to attract foreign investment.» Besides the new Development Law, the government has, so far, promised to cut corporate taxes to 30 percent by 2008.