Bleaker economic outlook

The spring forecast by the European Commission on the Greek and the other European economies will be substantially bleaker than that released last January, warned Economy and Finance Minister Yiannis Papathanassiou at the end of the Ecofin meeting in Brussels on Saturday. The meeting of the European Union’s economy and finance ministers heard the Commission suggest that growth rates will be even lower and deficits higher. Therefore, the number of the countries that could enter the excessive deficit procedure is set to rise. The forecast is expected to be issued on May 4 and will likely increase pressure on Greece to take more permanent measures to boost the local economy. Papathanassiou added that there was no specific discussion on Greece but he noted a positive atmosphere regarding the measures the Greek government has taken to date, within the context of the Commission’s recommendations. Governor of the Bank of Greece (BoG) Giorgos Provopoulos is predicting stagnation of the country’s economy and a rise in unemployment for 2009. In the annual report on monetary policy to be issued on April 15, the BoG governor will include the estimate that growth this year will be around zero, which constitutes a downward revision from the forecast of 0.5 percent growth he made in February. This converges with the estimates by the International Monetary Fund, the European Commission and international rating agencies, which see a contraction in the economy, as opposed to the government’s prediction of slight growth.

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