Slowdown set to fuel joblessness

The Organization for Economic Cooperation and Development (OECD) expects growth in the Greek economy to slow next year to an annual pace of 1.9 percent as well as a spike in jobless numbers, it said in a report yesterday. Greece’s economy is starting to slow under the weight of the global crisis, which has been reducing demand for the country’s two key sectors, tourism and shipping. Think tank OECD said Greek gross domestic product (GDP) is estimated to grow by 3.2 percent this year as economic activity has already weakened due to slowing domestic demand. «Growth is expected to be subdued until mid-2009 within the context of a sluggish external environment but to firm gradually thereafter,» the OECD said in its biannual outlook. The eurozone is tipped by the Paris-based group to shrink by 0.6 percent in 2009 before growing by 1.2 percent the following year. The outlook for Greece compares with a 2.7 percent growth estimate given by the Finance Ministry last week as part of its 2009 budget plan. National Economy and Finance Minister Giorgos Alogoskoufis said slowing inflation and an income tax rate cut will help to boost disposable incomes and support consumption rates. The OECD, which highlighted in its outlook that uncertainties are «exceptionally large,» indicated that the slowdown will take its toll on the Greek job front. Unemployment is seen as increasing to 8 percent next year from 7.5 percent in 2008. The OECD has forecast Greece’s budget deficit to shrink slightly to 2.7 percent of GDP from 2.8 percent this year. «Despite weaker economic conditions, fiscal consolidation should continue, relying on better control of public spending,» it said. [email protected]