Budget adopts positive outlook

The Finance Ministry has lowered Greece’s growth estimate for next year due to deteriorating global economic conditions, according to the latest budget plan made public yesterday, and warns of an uncertain environment next year. National Economy and Finance Minister Giorgos Alogoskoufis said gross domestic product (GDP) is seen expanding by 2.7 percent in 2009, down from a previous 3 percent estimate, as the eurozone teeters on the brink of a recession. «Our forecast is for growth to come in lower, at 2.7 percent. This is satisfactory given international conditions,» said the minister. Private consumption, which accounts for about two-thirds of the economy, is seen as slowing marginally to an annual pace of 2.2 percent as decelerating inflation and an income tax cut support disposable incomes, the minister added. Investments are seen as rising by 1.5 percent year-on-year, while growth in export revenues from goods and services will slow to 3.9 percent from 4.3 percent this year. «The achievement of the macroeconomic targets is difficult and will take a lot of effort,» the minister said. The budget deficit is seen as narrowing to 2 percent of GDP, from 2.5 percent this year, with public debt interest payments taking a growing chunk of expenses. Greece’s public debt, among the highest in the eurozone, is seen as falling 1.7 percentage points to 91.4 percent of GDP and will demand 12 billion euros in interest expenses in 2009. The figure stands at 11.3 billion euros this year. Next year’s targeted growth rate is seen as being an ambitious target given that the crisis has started to weigh on tourism and shipping, two of the country’s key sectors. «This is a rather optimistic scenario. The macroeconomic environment is uncertain. Risks are on the downside,» Nicholas Magginas, economist at National Bank, told Kathimerini English Edition. The European Commission said in a recent report that the Greek economy is seen as growing by 2.5 percent next year versus growth of just 0.1 percent for the 15-member eurozone.