Growth at 3.9 pct in 2nd quarter
Economic growth remained lively in the second quarter, according to data released yesterday by the National Statistical Service, which also showed a significant increase in exports. At the same time, investment slowed down compared to the last quarter of 2003, while construction activity – one of Greece’s main growth factors – and retail sales posted a slowdown. Compared to the second quarter of 2003, the economy grew 3.9 percent, dipping slightly from 4 percent in the first quarter. This is the highest rate in the 12-state eurozone. According to Bank of Greece forecasts, gross domestic product is expected to grow by 4 percent at the end of the year. After a protracted slide, Greek exports spiked 5.4 percent, compared to the second quarter of 2004, while the increase over the first quarter of 2004 – when exports dropped 6.5 percent year-on-year – was an impressive 14.4 percent. Imports grew by a marginal 0.75 percent. Nevertheless, investment posted a sluggish 3.9 percent increase year-on-year and was 8.2 percent down from the last quarter of 2003. In the second quarter of 2003 investment had risen 11.6 percent year-on-year. In a bid to provide a jab in the arm to investment while also reviving consumption and boosting disposable income, the government is now working on the preparation of two new draft laws on taxation and investment incentives. Meanwhile, the government is in a tight spot over the growing budget deficit, which may climb to 4 percent at the end of the year, according to recent estimates by Deputy Economy Minister Petros Doukas. This would be one percentage point above the limit allowed by eurozone rules.