ECONOMY

Exports still outweighed by imports in year’s first half

Greece’s trade deficit grew further by about 30 percent in the first half of the year to 13.4 billion euros, against 10.2 billion in the first half of 2002, according to data released by the Panhellenic Exporters’ Association (PSE) yesterday. Exports grew 5.1 percent year-on-year to 5.9 billion euros, but were overwhelmed by a surge in imports of 22 percent, from 15.8 billion to 19.3 billion euros. PSE said the growth of the trade deficit reflects a serious weakening of Greek producers’ competitiveness, and warned that imports may for the first time exceed the 40-billion-euro level for all of 2003. It also noted that among the 25 most developed nations, the only ones from which imports did not rise were Belgium, the US, Canada and Australia. In general, the export figures show a reversal of trends in recent years, when exports declined to the rest of the European Union and rose to central and eastern European countries. The rise in exports to other EU partners and members of the Organization for Economic Cooperation and Development (OECD) was especially marked, at 17 percent, with 16 percent exclusively accounted for by a surge in exports to the US. Exports to central and eastern European nations rose a mere 1 percent – the result of a 15 percent decline to the former Soviet states and a rise to the former Yugoslavia and the rest of central and eastern Europe; Russia accounts for about two-thirds of Greek exports to the region. A notable exception was Bulgaria, to which exports grew 25 percent. It is projected to become one of Greece’s main export markets if the trend continues. There was a further significant decline in exports to the Middle East, North Africa, Cyprus and Malta (23 percent). The rise in exports is exclusively accounted for by industrial goods, whose value rose 14 percent in euro terms, particularly chemical goods, which shot up 64 percent. The value of exported foodstuffs and live animals fell 13 percent and was not counterbalanced by a rise in exports of olive oil, beverages and tobacco. All categories of imports rose in value except raw materials; the value of imported industrial goods rose 26 percent, farm produce 10 percent and fuels 25 percent. The picture of Greece’s trade balance is significantly different if values are measured in dollar terms, due to the significant slide in the value of the US currency. Exports then rose in the first half, for instance, by 29 percent (42 and 44 percent to the OECD and EU respectively). The latest export data on the whole seem to confirm the findings of a PSE report to Prime Minister Costas Simitis last month, according to which the declining trend in exports over the past several years, which brought the value of Greece’s exports below even that of Luxembourg’s, is being reversed. The report said exports are rising at an annual pace of 6.4 percent, with industrial products leading the way. But imports are also growing at a rate of 23 percent. Simitis has said the government will provide help to exporters with European Union funds and introduce incentives. This 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 products abroad. PSE has also said boosting exports requires wider changes in the economy, including social security and labor market reform, the end of rigid, heavily regulated markets, a more efficient public administration, and lower taxes.