ECONOMY

In Brief

Greece’s current account gap gaping in August Greece’s current account gap widened sharply in the year to August, supporting central bank forecasts it will hit 14 percent of gross domestic product in 2007 and pose an increased threat to long-term growth and jobs. Data released by the Bank of Greece yesterday showed the current account deficit soared 29 percent to 19.2 billion euros in the year to August, the highest in the eurozone as a proportion of national output. «The current account gap is the outcome of a growing savings-investments imbalance,» said economist Platon Monokroussos at EFG Eurobank. «It also reflects factors ranging from eroding price competitiveness to the recent appreciation of the trade-weighted euro.» Greece is increasingly becoming a debtor nation – net private and public sector debt owed abroad grew to 92.2 percent of GDP last year from 51 percent in 2001. A higher oil import bill due to the rise in petroleum prices, increased payments for the purchase of ships and higher dividend and interest payments also weigh on the gap. (Reuters) Eurostat cuts Greek debt ratio BRUSSELS (Reuters) – Greece, which revised up its GDP figures for past years, yesterday had its debt-to-GDP ratio cut 9.3 percentage points by Eurostat to 95.3 percent for last year. The downward debt revisions were even bigger at 9.5 percent for 2005, and 9.9 percent for 2004 and 2003. The Greek budget deficit also fell as a result of the GDP revision and stood at 2.5 percent of gross domestic product last year, 0.1 percentage point lower than previously reported. It turned out 0.4 percentage point lower than earlier thought in 2005 at 5.1 percent and 0.6 percentage point lower in 2004 and 2003 at 7.3 and 5.6 percent respectively. The eurozone as a whole saw its budget deficit shrink to 1.5 percent of GDP last year and its debt fell to 68.6 percent from 70.3 percent. No need for VAT hike The Greek economy can withstand any negative repercussions of continued oil price rises if it continues the reforms it has carried out over the last three-and-a-half years, Economy Minister Giorgos Alogoskoufis told a press briefing in Washington yesterday. Nevertheless, he acknowledged that rising oil prices and inflationary expectations pose risks for the world economy. He also said that if public sector reforms continue, the savings will be such that there will be no problem with the budget and no need to increase value-added tax to 2010. Danaos shipping Greek shipping line Danaos Corp said it had ordered five new container ships, to be built by Hyundai Samho Heavy Industries, in a deal worth about $830 million. (Reuters)