Economy still far behind EU average
Despite the undisputed progress made over the past few years, Greece’s economy continues to lag significantly behind the others in the eurozone. The latest revision of the indices used by the European Commission to measure the degree of national economies’ structural adaptation shows that Greece’s per-capita income will stand at just 68.9 percent of the European Union’s average at the end of 2002 and its per capita productivity at 84.9 percent of the average, employment change will remain negative, the inflation rate will still be among the EU’s highest, and public debt as a percentage of GDP will outstrip those of the majority of EU member states. Greece also lags in the qualitative indicators. It spends less on education; spending on research and development is almost non-existent; it is last in spending on information technology and communications; it has the lowest number of patents in high-tech applications; Greek employees are the worst-trained in the EU; and, along with Spain, it has the highest joblessness rate among women. Greece is also steadily losing market share in the inter-European trade and continues to spend mightily on an unwieldy state sector. Greece may be enjoying the fastest growth rate among EU member states but this sort of prosperity is fragile. In its latest edition, The Economist says that within two years it is highly likely that things may take a turn for the worse. And the latest quarterly report on the state of the economy by the Foundation for Economic and Industrial Research (IOBE) warns that if a couple of «circumstantial» factors, such as the construction boom related to the 2004 Athens Olympics and the big inflow of EU funds, were to weaken, things could be bad for the economy. Greece also lags in attracting foreign investment, the Bank of Greece warns in its latest report. Greek enterprises invest more abroad than foreign ones invest in the domestic economy. Foreign investors accuse state and local authorities of doing their best to discourage investment, a fact borne out by recent decisions by local authorities. These reports demonstrate the urgent need for structural reforms and a tighter spending policy.