Bold moves necessary, IOBE says
The climate of uncertainty which has followed Greece’s accession to the eurozone continues to have a negative impact on the Greek economy but this could be stemmed, an economic research foundation said yesterday. «This climate can be improved if the government undertakes clear and bold initiatives which could convince that it can tap the favorable circumstances arising from the positive developments in the real economy, particularly the high GDP growth rate which is projected to continue in 2002,» the Foundation for Economic and Industrial Research (IOBE) said in its first quarterly review for this year. The report notes that earlier positive policy decisions seem to have been watered down as a result of apparent governmental concern for their political cost. «Such phenomena may deteriorate, as 2002 is a (municipal) election year – which has been proved to intensify the repercussions of political considerations on the economy,» said IOBE. The report, nevertheless, notes the improved prospects for the global economy, the favorable forecasts for the Greek economy and the positive steps made in a number of sectors. «A change has been discernible in the first months of 2002 in all structural policy axes, such as privatizations, the liberalization of utility markets and in bolstering competition.» The report welcomes the fact that privatizations are now being promoted through the search for strategic partners rather than partial stock flotations. IOBE finds that a recently unveiled committee report on taxation reform, which sparked off a miniature political storm, is based on sound premises, as it proposes a simple system that would lessen the overall tax burden and have a positive impact on economic activity. The paper underlines the importance of continuous adjustment required for real convergence with the other EU-member economies. «It seems that this target cannot be easily pinpointed and function as a moving force in the same fashion that the EMU target did, because real convergence includes all the sectors of economic life, is diffused at all levels and cannot be easily quantified in a small number of indicators. Real convergence does not only mean an increase in per capita income, it means at the same time the modernization of the State and public administration and the existence and continuous enlargement of a modern private sector with competitive enterprises.»
