Forecast of growth plus inflation
The Greek economy is also expected to perform well over the next few years, according to the European Commission’s spring forecast for member states. The GDP growth rate is expected to stay significantly higher than the European average and unemployment is expected to drop. On the other hand, inflationary pressures will remain, especially in 2002, reliable sources said. The report is to be presented officially in Brussels tomorrow and may include some changes. However, sources said that the forecast is for growth of 3.7 percent of GDP in 2002 and 4.2 percent in 2003, at a time when the EU average is expected to be below 1.5 percent. Unemployment is forecast to drop gradually, registering at 9.9 percent this year and 9.3 percent in 2003. This percentage remains high but is an improvement on the Commission’s previous forecast in November (which expected 10.1 percent this year and 9.6 percent next). Public debt is expected to drop to 95.5 percent of GDP in 2003, from 98 percent in 2002. It will be interesting to note precisely what method the Commission will use to calculate the debt, as a difference has arisen with Athens over the handling of revenues from share convertible certificates and convertible bonds based on the revenues of future privatization and funds from the Third Community Support Framework. The Commission expects inflation to close at 3.5 percent this year, one of the highest rates in the European Union, before dropping to 2.9 percent in 2003. The Commission has been issuing warnings for some time about the existence of «inflationary pressures» in the Greek economy. As for the general course of the Greek economy, the Commission is expected to note (as it usually does) that almost all of the current economic development is based on two external factors which have expiry dates: Olympic projects and funding from the Community Support Frameworks. Thus, the Commission will continue to urge Athens to liberate markets, reform the pension and social security systems and make the labor market more flexible.
