Wage restraint sought

The central bank’s governor yesterday called for self-restraint in the upcoming collective wage agreements for 2002 and urged depositors to buy long-term state bonds, presenting them as the only credible counterweight to the current negative yields of savings accounts. Presenting his preliminary report on the economy yesterday, Bank of Greece governor Lucas Papademos noted that the reduction in yields from bank deposits was the necessary price to pay for joining the eurozone. Regarding wage increases in 2002, he stressed that the social partners must keep in mind the continuing drop in the inflation rate, the tax measures that were recently adopted and the rate at which the cost of labor keeps increasing in Greece, and which remains the fastest rate of increase in the eurozone. For 2002, Papademos forecast a drop in consumer inflation to 2.5 percent and the growth rate to be maintained at between 3.5 and 3.9 percent, more than double that of the eurozone, which he forecast at between 1.3 and 1.5 percent. The Bank of Greece governor expects the Greek economy to be affected by the international crisis, but he noted that the blow could be softened by the swifter adoption of structural reforms which would increase productivity both in the public and private sectors. Papademos noted that one of the reasons for Greece’s higher growth was the rise in private sector investments by more than 75 percent since 1994, the absorption of funds from the third Community Support Framework, the privatization program, more consumer loans and the continuing fiscal austerity. He said that the introduction of the euro is proceeding smoothly. He noted that although he had expressed hope that there would not be increases in the retail market, there had been some.

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