ECONOMY

BoG sees 2007 growth at 4 pct

The Greek economy will grow by a robust 4 percent and inflation will drop to 2.8 percent in 2007, while efforts to reduce the budget deficit must continue, the country’s central bank said yesterday. «The policy of fiscal adjustment that has been implemented successfully in the last years should continue. The same applies for structural reforms,» Bank of Greece Governor Nicholas Garganas said after handing over the bank’s 2006-07 monetary policy report to Parliament. The report said Greece’s economy is set to continue to grow at a steady pace, while its budget deficit is seen as dropping to 2.4 percent of GDP in 2007, firmly below the 3 percent EU ceiling. «Real GDP is expected to grow by 4 percent in 2007, the same as last year, in line with the average annual pace of the last decade, 4.1 percent,» the bank said. Garganas said the report underlines the need to tackle chronic problems to ensure high economic growth rates are sustained in the years ahead. «Fiscal adjustment must continue in the next years in order to achieve a budget surplus and a significant reduction of public debt in the long term,» the report said. Weakening economic competitiveness has led to a considerable widening of the country’s current account deficit, seen at 11.5 percent of GDP in 2007, it added. Garganas said the 2006 current account deficit was expected to come in at a record 12.1 percent of GDP. He said persistently high inflation was a concern. «The continuing loss in international competitiveness… is due, among other things, to the fact that inflation in Greece continues to exceed the eurozone average,» Garganas said. (Reuters)