ECONOMY

Low competitiveness ringing alarm bells

Greece’s deteriorating competitiveness ranking is a dire warning that bold reforms are needed to improve economic performance and safeguard long-term prosperity, the country’s industrialists said yesterday. Greece ranked 65th among 131 countries in terms of economic competitiveness, down from 61st last year, according to the World Economic Forum’s 2007 index. Among the 27 European Union members, Greece ranked 25th, with only recent entrants Romania and Bulgaria getting worse grades. The poor showing confirmed the central bank’s concerns that growth and jobs are at risk in the longer term. The Bank of Greece has stressed the need to address structural woes and pursue reforms, including fixing an ailing social security system. The industrialists association SEV said the low international ranking was worrying. «The stagnation of our competitiveness condemns us to a future of low performance and social injustice,» SEV said. «All international reports are transmitting a danger signal.» «Our weakness as an economy, as a society and a state to meet modern specifications is reflected by the walloping current account deficit,» it said. Greece’s current account gap widened sharply in the year to August, supporting central bank forecasts that it will hit 14 percent of gross domestic product (GDP) this year. Data released last week showed the current account deficit soared 29 percent to -19.2 billion, the highest in the eurozone as a proportion of national output. The gap reflects an eroding price competitiveness as the country suffers from a persistent inflation differential versus the eurozone, its main trading partner. While growing faster than its European partners, with GDP expanding at around 4 percent annually in recent years, 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. To reverse the trend, the central bank says Greece needs to change its economic growth model to one based more on exports and less on domestic consumption. SEV said that the government should urgently push through its reform plan, which was put together two years ago. (Reuters)