Greece appears to have trimmed its excessive budget deficit to below the EU-mandated 3 percent of gross domestic product, and will probably exit the regime of fiscal supervision later this year. However another, older, deeper and certainly more difficult deficit to tackle is now being targeted by the European Commission, that of the trade balance. The issue has already being discussed by the Eurogroup – the eurozone’s informal council of economic and finance ministers – but Economic and Monetary Affairs Commissioner Joaquin Almunia and most governments want to see these discussions ultimately lead to the adoption of restrictive measures for those member states showing the largest deficits. In an interview with Agence France-Presse, released on Sunday, Almunia struck a note of caution about the risk of global financial and trade flow imbalances, and pointed out that although the risk was not a great one, there were some countries in the eurozone with dangerously high current account deficits, such as Spain, Greece and Portugal. If the three had not joined the eurozone and kept their national currencies, they would have been forced to devalue them «with all the ensuing negative economic consequences,» he said. In 2005, the last year for which figures are available, Spain had a current account deficit of 7.4 percent of GDP, Greece 7.7 percent and Portugal a whopping 9.2 percent. A study by the National Bank of Greece, released yesterday, considers the country’s current account deficit – most of which is due to the trade deficit – to be high but under control. The deficit stood at 12 percent of gross domestic product in 2006 but was up almost 25 percent in January. The continuing rise is mainly due to three factors, the study says: The first is strong investment activity (mainly in private housing), payments for the purchase of new ships and payments for fuel imports. These three factors account for 50 percent of the deficit. Investment has been the economy’s main driving force for the last eight years: Fixed capital investment stood at 28 percent of GDP last year, against a eurozone average of 22 percent. The study poses the question of how the deficit can be tackled without the risk of pushing the economy into a chronic slowdown like the one experienced by Portugal. It takes the view that the impact of the above three factors could be reversed in the medium term, without serious consequences for the economy.