ECONOMY

Crisis no threat to growth, jobs

The international financial crisis is fueling inflationary pressure in the Greek economy but its impact on growth and employment is limited, according to Economy and Finance Minister Giorgos Alogoskoufis. The Finance Ministry said yesterday initial data indicated that second-quarter economic growth slowed to an annual 3.2 to 3.3 percent versus 3.6 percent in the first three months of the year. «We have some impact from interest rates but the consequences that appear on the real economy, gross domestic product (GDP) growth rates and employment are relatively limited,» said Alogoskoufis after meeting with Prime Minister Costas Karamanlis yesterday. Greece’s economy, one of the fastest growing in the eurozone, has been tipped by the Finance Ministry to grow by 3.6 percent this year. However, economists expect the actual figure to fall short of the government’s target due to the slowdown in global economic growth and adverse international conditions, such as rising inflation worldwide. EFG Eurobank said in a report made public yesterday it has revised lower its targeted GDP expansion rate for 2008 to 3.3 percent, from 3.5 percent previously, with a further drop-off to 3.0 percent expected next year. Tighter credit conditions and the dampening effects of higher oil and food prices on household disposable incomes will weigh on growth, according to the bank. The country’s tourism sector, which has seen a 3 percent rise in arrivals in the first half, and a growing shipping sector are helping to cushion the negative impact from the adverse international environment. In terms of prices, Greece has felt the shock of rising oil and commodity prices more than many of its EU peers due to structural rigidities in the economy, such as protected professions, and monopolistic practices evident in the economy. Eurobank sees inflation averaging out at 4.5 percent for the year. Sources have indicated the ministry will revise targets in September as it prepares the final draft of the 2009 budget.

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