ECONOMY

Greece feeling confident of 4-pct growth rate next year

Greece said yesterday that it is confident of achieving a 4-percent growth rate next year, with increased investment spending, strong domestic demand and structural reforms expected to cushion the economy against external shocks and global uncertainties. «The Greek economy is prepared for these developments,» Economy and Finance Minister Nikos Christodoulakis said yesterday, referring to the prospects of the US waging war against Iraq and the potential drag on economic growth. He said the government was sticking to its target of 4-percent growth as outlined in the updated stability growth program for 2001-2004 despite soft growth data from other countries in recent weeks. Earlier this month, the European Commission trimmed its forecast for third-quarter eurozone growth following a slowdown in the region’s three biggest economies. Greece, in contrast, reported a 4-percent increase in second-quarter growth on the back of strong investment spending. Christodoulakis said the key to Greece’s sustained growth would be structural reforms and robust domestic demand. He said the government plans to speed up the public investment program, increase support for businesses, deregulate markets and intensify structural reforms. Christodoulakis said the robust growth rate projected for 2003 is principally based on a strong domestic sector. «While EU community funds are expected to contribute to a third of Greece’s growth rate, national funds will account for 2.7-2.8 percent of the total figure,» he said. He said a raft of positive economic activity data in the year’s first half showed that Greece has the ability to keep up the strong pace. Private consumption in the first six months grew by 2.6 percent against 0.4 percent for the eurozone overall, investments increased by close to 11 percent compared with a 2.8-percent drop in the region, while exports rose by 3 percent against a 1.5-percent fall in the eurozone as a whole. On consumer prices, however, Greece stood out with its 4-percent harmonized inflation rate over an 8-month period, nearly twice the region’s inflation. Christodoulakis said the government aims to bring cost pressures under control by trimming spending and costs, and by keeping prices steady. Referring to the government’s policy goals next year, he said the main focus would be on reducing public debt, controlling spending and rates at public utilities, and speeding up the privatization and public investment programs. The public debt-to-GDP ratio is projected to come down by 2 percentage points and 4 percentage points in 2003 and 2004 respectively from 105.1 percent this year. Revenues and spending are expected to grow by 5.3 percent, pensions and wages by 5.6 percent and public investment outlay by 16 percent. Offsetting this will be a 7.1-percent cut in consumption spending.