Gov’t upbeat, despite hurdles

A week before Prime Minister Costas Karamanlis gives his annual keynote economic policy speech at the opening of the Thessaloniki International Trade Fair, the government said it is satisfied the Greek economy is doing as well it could given the difficult international environment. «Greece today has a satisfactory growth rate and unemployment is falling, despite the serious difficulties in the international environment, with the rising price of oil and the stagnation in the European Union,» National Economy and Finance Minister Giorgos Alogoskoufis told reporters after attending a meeting with Karamanlis and industrialists’ representatives. «Of course, the growth rate could be higher, but under the present circumstances and given the post-Olympic downturn in activity, it is the highest possible. Furthermore, fiscal deficits are falling significantly,» Alogoskoufis added. Greece’s gross domestic product (GDP) grew by 3.5 percent year-on-year in the first quarter. Alogoskoufis said this week second-quarter growth will be as fast and predicted the annual growth rate to be 3.6 percent, against a forecast of 3.9 percent in the budget. In 2004, the economy grew at a pace of 4.1 percent, more than double the eurozone average. The number of registered unemployed in July dropped by 40,570 from the previous year level of 458,700, and the National Statistics Service’s official rate for the first quarter of 2005 was 10.4 percent. The European Union has given Greece two years to bring its fiscal deficit down from 6.4 percent of GDP last year to below the mandatory 3 percent. Responding to questions, Alogoskoufis said that contrary to widespread belief, the government is losing out from the rising price of oil. «It is a myth that the state collects more when oil prices rise,» Alogoskoufis said. «Fuel taxes, in their biggest part, are fixed. As a result, with rising fuel prices and lower consumption, the government loses revenue.» After the meeting with the Karamanlis, Federation of Greek Industries (SEV) President Odysseas Kyriakopoulos said the current period is one of «bold reforms» which will continue. The future of the country depends on their effectiveness. Free trade zones Later, during a press briefing, the Association of Industries of Northern Greece (SVVE) called for the creation of free trade zones along the country’s northern borders, in order to stem the migration of labor-intensive industries to neighboring countries. According to SVVE President Giorgos Mylonas, such zones should be easily accessible to foreign workers, which would significantly reduce Greek firms’ operating costs. He said SVVE also proposed to the prime minister the setting up of a General Secretariat for Balkan Affairs at the Macedonia-Thrace Ministry based in Thessaloniki, with a view to upgrading the city’s role as an economic center of the region. It also proposed an administrative restructuring of the country’s 13 regions to ensure they qualify, according to their income per head, for European Union investment subsidies under the Fourth Community Support Framework for the 2007-2013 period. SVVE argues that on the basis of present income levels, five regions, including western and central Macedonia, will be excluded from such subsidies despite their relative lack of development, and that the geographical realignment of the regions will help the implementation of programs across wider areas.