New strategies for sustainable, long-term growth

The recent liveliness in the private sector, combined with government reforms and the promise to resume the ambitious public infrastructure program, create hopes of maintaining high growth in the short term but do nothing to change Greece’s position in the global economy. By themselves, these moves cannot guarantee growth strong enough to help the Greek economy cease being a competitive laggard or sustainable, long-term job creation and income growth. Just three weeks ahead of the Prime Minister’s delivery of the traditional speech outlining economic policy priorities at the Thessaloniki International Fair, the Greek economy needs a radical change of direction to invest in new ideas and activities. It also needs political support for these ideas. Analysts believe the economy’s best hope of improving its competitiveness lies with globalized services, where demand will continue to be high. Tourism is such an obvious sector, one in which Greece has a natural advantage. Success, however, will depend on improving infrastructure. In this respect, a lot needs to be done and priority must be given on improved sea transportation. These improvements must be made before the window of opportunity provided by the Olympic Games closes, which will be fairly soon. The second sector of services that can be successfully exploited is properties, especially the creation of housing developments to benefit European retirees. One study predicts that the rise in the Europeans’ average age will cause a shift of the population southwards. In ten years’ time the number of Europeans aged over 65 will reach 85 million. If we accept the likelihood that they will behave like their counterparts in the United States, it will not be outrageous to expect that about 2 to 3 million will at least become semi-permanent, or seasonal, residents of Greece. This would provide a tremendous boost to growth. The banking sector will be the third motor of growth. Greek retail banks have already made great investments in other Balkan countries, which will increasingly become an important source of profits. Finally, Greece could attract young foreigners by developing quality universities. This, however, requires a radical revamping of the higher education system.