Growth less than forecast in 2002-03

The inflation and growth targets for the finalized 2003 budget may be closer to the «pessimistic alternative» than the government would like to believe. When Economy and Finance Minister Nikos Christodoulakis announced the draft 2003 budget late last month, he said the economy would grow at a 4.1 percent pace, higher than this year’s 3.8 percent. It appears that, as it did last year with the September 11 terrorist attacks on the United States, the government will use the excuse of an imminent US war against Iraq to cover the weaknesses of the domestic economy. Last year, the terrorist attacks served as an excuse for the slowdown in the Greek economy, which had began much earlier and was the result of the precipitous drop in the Athens Stock Exchange. The terrorist attacks only made the situation worse. This year, and despite the climate of crisis permeating international markets, Christodoulakis and Prime Minister Costas Simitis persist in projecting a sense of optimism. However, despite Christodoulakis’s reassurances that the Greek economy is not affected by the international slowdown, ministry officials have quietly been working to revise figures in both the 2002 and 2003 budgets. The Bank of Greece has already revised growth and inflation figures for 2002. These figures will be included in the governor’s interim report on the economy which will shortly be submitted to Parliament. Economic growth will probably reach 3.6 percent this year, instead of the expected 3.8 percent, officials at the Economy and Finance Ministry say. This would still place Greece ahead of all industrialized nations for the year; however, even officials are not certain about the final figure and are waiting for estimates by the European Commission and the Organization for Economic Cooperation and Development (OECD) to give their final estimates. According to sources, the forecast growth rate for 2003 will fall to 3.5 percent and perhaps lower if a possible conflict in Iraq is prolonged. Even so, Greece would grow at a much faster pace than the EU average, forecast at merely 0.8 percent in 2002 and 2.2 percent in 2003.