ECONOMY

Inflation rate seen hitting 4.6 percent in May before declining

Greek inflation will likely hit a six-year high of over 4.6 percent in May before declining in autumn, while global economic woes make year-end predictions impossible, Greece’s statistics service chief said yesterday. The pace of Greek economic growth, still seen as stronger than that of the eurozone, thanks to booming tourism, shipping and construction, is also hard to estimate but unemployment is on a downward trend this year and next, said National Statistics Service (NSS) chief Manolis Kontopyrakis. «In May, inflation will be higher compared to April’s 4.4 percent, and probably over 4.6 percent,» he told Reuters in an interview. «The main reasons are high oil and grain prices. We will see a decline in autumn.» Record-level energy and food prices pushed eurozone inflation to 3.6 percent in March, easing to 3.3 percent in April. Kontopyrakis said Greece may be suffering from higher levels of inflation than its eurozone peers but it is also managing faster economic growth in difficult times. Greece’s 230-billion-euro economy, about 2.5 percent of the eurozone, grew 4 percent in 2007, appearing immune to global economic problems. The government has trimmed this year’s target to 3.6 percent, citing adverse world economic conditions, still above the bloc’s 1.7 percent projection. «Greek GDP growth is very hard to predict, it will depend on what happens to the world economy, which is very unpredictable,» Kontopyrakis said. «The only thing we can say is that it is good compared to the eurozone.» GDP boosted He said growth was mainly boosted by tourism – making up about 12 percent of Greek GDP – shipping and construction. To a lesser extent, exports, mainly of services, and domestic demand were also growth drivers. «In construction, we have a large number of building permits from past years, which are being delivered during this period,» he said. Kontopyrakis said Greece was preparing a new revision of its GDP, starting in July. «It will be ready to be submitted to Eurostat (the EU statistics service) in the middle of 2009 and will probably come into effect in early 2010,» he said. Greece revised its GDP last year to include parts of the black economy, such as proceeds from certain illegal activities and tax evasion, the first time its figures have been updated in over a decade. Eurostat rejected the proposal for a 25 percent upward revision, approving only about 9 percent. The move still helped Greece shave its budget deficit-to-GDP ratio and remain firmly under the EU’s 3 percent limit. Kontopyrakis was upbeat on the unemployment outlook as the government seeks to get the jobless rate down to 7.5 percent this year. In March, eurozone unemployment was 7.1 percent. «We have a declining trend which will continue this year and in 2009,» he said. «In 2008, it will be below 8 percent, thanks to economic growth and tourism.»