EC report dampens hopes for economy

Sounding a warning bell for the Greek economy, the European Commission yesterday predicted that the government would fail to meet its growth and deficit targets and expressed concern at the lack of competitiveness of the country’s industry. In its spring economic forecast for 2005-2006, published yesterday, the Commission paints a bleak picture of its expectations for the Greek economy over the next 20 months. In a chapter titled «Olympics’ bonus tapers off,» the report warns that the «petering out» of the investment opportunities prompted by last summer’s Games will shape the economy’s performance this year and next. In a revised Stability and Growth program, presented last week, the government forecast that growth will average 4 percent in 2005-2007 but the Commission yesterday predicted that GDP would grow at an average of 3 percent in 2005 and 2006. Finance Minister Giorgos Alogoskoufis predicted that the deficit will drop to 3.5 percent of GDP from 6.1 percent this year and then to 2.8 percent by the end of next year – in line with the eurozone limit of 3 percent. However, the Commission’s spring forecast envisages the deficit only dropping to 4.5 percent this year and 4.4 percent in 2006 – although it admits that extra measures in the revised Stability and Growth program have not been taken into account. The report also notes that Greek industry has a «competitiveness problem» since it did not take advantage of expanding export markets last year.

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