ECONOMY

GDP revision set for approval

The European Union’s statistics service (Eurostat) will probably approve in September Greece’s proposed upward revision of its gross domestic product (GDP), sources say. Athens has said its GDP should be calculated at 25 percent higher for the 2000-2006 period, to take into account income accrued mostly from the country’s extensive underground economy, and to make up for underestimates in sectors such as tourism, shipping, banking and telecoms. Greek economic indicators will improve substantially as a result of the revision. «With the non-revised data in purchasing power parity, Greece’s GDP per capita in 2006 is estimated at 78.9 percent of the eurozone’s average GDP per capita. With the revised data, Greek GDP per capita will reach 99 percent of the eurozone average,» says Alpha Bank’s latest Economic Developments Bulletin. Also, according to the revised data, the public deficit will come to 2 percent (from 2.6 percent), public debt will fall to 83.2 percent of GDP (from 104.1 percent). The revision will also alter the overall picture of the Greek economy. GDP for 2006 will be revised up to -245.6 billion, from -195.3 billion, with 72 percent of GDP accounted for by the services sector. Public spending will be limited to 20.3 percent of GDP, instead of 25.6 percent. Corporate debt as a percentage of GDP will be reduced from 47.4 percent in September 2006 to 37 percent. Total household borrowing will be lowered to 33 percent from 42 percent. As if by one stroke, the revision achieves a leap toward the realization of the economy’s convergence with the rest of the eurozone, for years set by governments as the mantra of the country’s economic policy. But the revision will also be accompanied by retroactive payments to the EU budget, estimated at more than -2 billion. Budget on course There is no fear of the budget veering off course, Economy and Finance Minister Giorgos Alogoskoufis said yesterday. «The shortfall recorded in public revenues in the first five months of the year is due to the abolition of the discount granted to enterprises for paying their taxes in lump sums. As a result of the abolition, enterprises started paying taxes in installments, but the shortfall will be made up in the coming months,» Alogoskoufis said in a radio interview. Alogoskoufis was categorical that the government would not engage in pre-election pork-barreling. «People know that a government which gives pre-election handouts really has no program, has no plans for the future, that it simply tries to buy out votes,» he said. He insisted that the government has substantially supported the economically weaker strata of the population, through supplements for pensioners and farmers, and tax breaks. Referring to the stalled privatization of Olympic Airlines, Alogoskoufis said: «Problems cannot all be solved immediately but we can make larger steps in relation to the past.»