Economy sails in choppy waters

Government ministers may have been heartened by the 3.6 percent rise in gross national product (GNP) in the first quarter, as it was better than expected, but prospects look rather shaky. The reason is that five major economic fronts remain open, with particular uncertainty regarding oil prices and tourism. The Economy Ministry’s trimmed growth rate forecast for 2008 to 3.6 percent from the previous 4 percent is based on the European Commission’s assumption that oil prices will average $100 a barrel. We are now in the fifth month of the year and prices remain steadily at a much higher level and no analyst’s forecasts seem to concur with the Commission’s. On the contrary, they see oil prices continuing to rise in coming years. UBS sees the average oil price per barrel at $115 this year, at $120 in 2009, at $126 in 2010 and $155 in 2012. Goldman Sachs has predicted it will reach $200, having successfully forecast three years ago that it would reach $105 in the long-term. Greece’s tourism industry is also seen on a downturn, mainly due to the slowdown in the European economy, the Olympic Games in Beijing and the Euro soccer tournament in Austria and Switzerland next month. Hoteliers in the Attica region have predicted a 6 percent fall. Sales down Data for private consumption are also downbeat. Supermarket sales were down 1.8 percent in February year-on-year, with a sharper drop in small shops. Clothing and footwear outlets and small grocery stores saw turnover fall by 11.7 percent and 8.3 percent, respectively. Department store sales were 3.9 percent lower, while furniture, electrical and household equipment turnover fell 4.4 percent. Building activity and the property market are also causing concern. Private construction was down 2.6 percent in the first two months, year-on-year, while the National Statistics Service estimates that realty assets have fallen 20 percent in value. Alpha Bank estimates private housing investment will decline by 2 percent this year, after a 6.8 percent drop last year, before recovering next year. Officials believe prospects are more favorable than indicated by the above figures. They cite the fact that the purchasing managers index rose to 54.4 points in April, from 52.6 in March and 51.5 in January. The business confidence index rose above 100, to 101.4 in April from 99.4 the previous month, while the number of months of assured production rose to 4.9 to 5.1. «Despite the uncertainty surrounding oil prices, it seems we are certain to achieve at least a 3.4 rise in the growth rate,» said a senior official.