GDP growth, at 4.7 percent, is Greece’s fastest in 25 years

Greece’s gross domestic product (GDP) rose 4.7 percent year-on-year in 2003, the fastest such rise in 25 years, according to preliminary data released yesterday by the National Statistics Service (NSS). The initial forecast was for 4.2 percent growth, but a very good third quarter, when GDP rose 5.3 percent, combined with a 5 percent growth in the final quarter, helped the Greek economy overshoot earlier estimates. NSS data also revealed that total demand – consumption, investments and exports – rose 5.2 percent. Specifically, consumption rose 4.3 percent, investment 11.6 percent and exports 1.6 percent. Imports rose 3.7 percent, however, which means that Greece’s competitiveness has been further undermined. The data was announced yesterday by Economy and Finance Minister Nikos Christodoulakis in his final press conference as minister ahead of the March 7 election. Christodoulakis seized the chance to recapitulate his record in office, since his appointment on October 24, 2001. He emphasized the high growth rate and the fact that inflation has slowed to an annual pace of 2.9 percent in January. Stability Pact Christodoulakis also referred to the approval, on Tuesday, by the council of EU finance ministers (Ecofin) of Greece’s updated Stability and Growth Program, which includes forecasts on a range of major economic indicators covering the period 2004-2008. He avoided, however, any mention of Ecofin’s serious reservations as to the viability of the forecasts and its opinion that the estimates were optimistic. Ecofin also warned Greece that its 20004 budget deficit risked exceeding the 3 percent (of GDP) limit imposed by the Maastricht Treaty. Christodoulakis predicted that the European Commission’s proposal for funding the Fourth Community Support Framework (CSFIV) program will provide «significant» funding for Greece. CSFIII, which runs from 2000-2006, includes investments worth more than 50 billion euros. About half is EU financing, with the rest coming from the State and private sectors. It is through CSFIII that the major infrastructure projects under way, which have helped boost GDP growth, are financed. CSFIV funds will have to reach the 10 newcomers to the EU plus Bulgaria and Romania. Christodoulakis said negotiations on CSFIV would be tough. Already, the Commission’s proposal to increase the EU budget by 60 percent in the period ending in 2013 has provoked fierce reaction from the net contributors, who want to reduce their participation, not see it increase. The same reaction would probably greet a Commission proposal for huge funds for CSFIV. Before talking to reporters yesterday, Christodoulakis met with Development Minister Akis Tsochadzopoulos. The two discussed pending issues, such as the ongoing negotiations with Spain’s Gas Natural, which is interested in acquiring a 35 percent stake in the Public Gas Corporation (DEPA).