Greece in for growth

The Organization for Economic Cooperation and Development (OECD) sees the Greek economy growing at a strong pace this year but warns of lingering structural problems undermining competitiveness, sources told Sunday’s Kathimerini. The predictions are included in the OECD’s world economic spring outlook, expected to be made public tomorrow at a meeting in Paris. The meeting is to be chaired by Prime Minister Costas Karamanlis. Greece last presided over the gathering in 1976. The 30-member OECD sees the economy growing by an annual rate of 3.7 percent this year with expansion easing marginally to 3.6 percent in 2007. Estimates of strong growth are helping to cast aside predictions of a drastic slowdown in the local economy with the passing of the 2004 Olympic Games. The global economy is seen as providing Greece with the right environment to maintain its positive economic momentum. The OECD sees robust growth continuing around the globe this year on the back of expansion in the USA, recovery in Japan and ongoing demand from Asia. Structural problems in Greece remain a problem for competitiveness. The source said that the OECD predicts the current account deficit will widen in 2006 to 7.8 percent of GDP, highlighting the country’s declining competitiveness. This in turn could have a negative impact on employment figures. The conservative government has made the adoption of structural reforms a central part of its economic policy as it moves to improve a rigid labor market. Changes include reforming insurance funds for bank employees and the lifting of permanent job status for newly hired government employees. The OECD, a Paris-based think tank whose economic outlooks are considered to be influential, predicts that the local unemployment rate next year will drop to 9.7 percent from 10 percent this year. Consumers will be glad to hear that inflation is likely to ease in 2007 to around 3 percent from an estimated 3.3 percent this year. Participants at the gathering are also expected to discuss the possibility of further increases in interest rates after economic data showed recently that high oil prices have affected inflation.