ECONOMY

Robust growth rates

The Greek economy’s growth rates have confuted all unfavorable forecasts after the 2004 Olympic Games and will remain high thanks to improving performances in investment and exports, Economy Minister Giorgos Alogoskoufis said yesterday. Presenting his ministry’s semi-annual report on economic developments and prospects, Alogoskoufis noted that Greece, Ireland, Finland and Luxembourg were the fastest growing economies in the pre-enlargement, 15-member EU, in 2006. Greece’s gross domestic product (GDP) grew by 4.3 percent, against an average 2.7 percent in the eurozone, accelerating to 4.6 percent in the first quarter of 2007, against 3 percent in the eurozone. These robust growth rates, he said, are mainly due to the significant rises in investment and exports, not to an expansive fiscal policy, as in the past. Exports were up 13.7 percent in 2005 and 18.2 percent in 2006. In the first quarter of 2007, they rose 14.2 percent, while income from tourism increased 10.8 percent, after a 15.8 percent drop in 2006. Investment rose 12.7 percent in 2006, accounting for 77 percent of the country’s growth. In the first quarter of this year, investment was up by about 15 percent, against 9.4 percent in the same period of 2006. Real disposable income (without inflation) was 4 percent higher in 2006, against 3.4 percent in 2005, accounting for a 3.7 percent rise in private consumption at constant prices in the 2005-2006 period. Alogoskoufis acknowledged that unemployment remained high compared to the EU average, and said the fact that not enough jobs were being created was one of the most serious problems facing the economy. However, the jobless rate has been falling, from 11.3 percent in the first quarter of 2004, to 8.8 percent in the last quarter of 2006. According to budget estimates, it will fall to 8.2 percent at the end of the year. Inflation is seen slowing below 3 percent this year, compared to an initial forecast of 3 percent.

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