Greece holding up better than EU

Prime Minister Costas Karamanlis reiterated yesterday that Greece is holding up better than many of its European peers in the global financial and credit crisis as economists continually lower the economy’s targeted growth rate for 2009. «The situation is relatively better than in many other European countries and we have the tools and desire to push as much as possible for the real economy,» Karamanlis said in Brussels yesterday. The government is predicting gross domestic product will expand next year by 3 percent, down from an estimated 3.4 percent in 2008. However, economist forecasts are far more conservative, as investment activity and consumption growth continue to slow. Investment bank Morgan Stanley said that the Greek economy is seen as expanding next year at an annual pace of 0.9 percent under the weight of slowing global growth. The International Monetary Fund reportedly said earlier this week that Greece’s economy is expected to grow by 2 percent in 2009. Experts have pointed out that although Greece is expected next year to outperform its peers in the eurozone, the impact of reduced growth on the local economy – which has been expanding for the last 16 years – may be as harshly felt as a recession. Turning to Greece’s fiscal policy, Karamanlis ruled out any further tax hikes and said that there will be no change to the «budget’s main framework.» Greece will aim to secure the maximum flexibility in the EU Stability and Growth Pact, added Karamanlis. Greece’s 2007 budget deficit is expected to be at least 3.4 percent, above the European Union’s 3 percent rule. In August, the conservatives introduced a series of new taxes in a bid to boost annual budget revenues by some 4 billion euros each year.