ECONOMY

Calls for Greece to build on current achievements

Greece has made impressive gains on both the economic and international front and it should now work to consolidate these achievements before community funds peter out after 2006 and infrastructure projects related to the 2004 Olympic Games come to an end, The Economist said in a survey of Greece due out tomorrow. Getting the economy on the right track and improving its international image underscored Greece’s «impressive progress» but «these achievements are fragile,» the UK publication warned. It urged the government to build on its accomplishments before its two main engines of growth come to a stop. The first, European Union structural funding, which amounts to a hefty 21 billion euros over the period 2000-2006, is expected to taper off drastically after 2006 as Brussels takes on new members at the end of the decade. The batch of infrastructure projects related to the 2004 Olympic Games is another source of growth that is due to dry up even earlier. The survey also pointed to the influx of immigrants in recent years that has helped bolster the Greek economy. The estimated 800,000 immigrants, which make up a fifth of the labor force, contributed some 1 percent of gross domestic product in 1996, according to a study by Athens University. However, Greece could face social and economic strains in the coming years as the immigrants settle down and begin to make their voices heard. The survey singled out Greece’s above-average inflation and high unemployment as two persistent problems that refuse to go away. It bemoaned the small contribution to national income from Greek conglomerates, a number of which have diverse interests stretching across the globe. Problems that need to be tackled include modernizing company law, simplifying the tax system and restructuring the debt-burdened social security system. On the political front, Greece scored a remarkable success after it apparently broke up the terrorist group November 17 this summer, a feat which boosted Prime Minister Costas Simitis’s credibility at home and abroad, The Economist noted. These achievements mean that Greece is «better placed than ever before to cope with the challenges of an integrated Europe and a potentially turbulent region,» it said. Separately, National Bank of Greece said yesterday that Greece’s objective of 4-percent growth in 2003 will be conditional on three factors. To reach the target, eurozone growth would have to be in the 2.5-percent region, oil at below $25 a barrel and government spending increasing by 11 percent in real terms, the bank said in its September economic and market analysis report. Problems with any of these preconditions could hold back Greek growth to 3.3 percent, it said. The report also pointed to stubbornly high inflation, which is not expected to fall below 3 percent next year.