Papantoniou cautious over growth rate

National Economy and Finance Minister Yiannos Papantoniou yesterday appeared distinctly more guarded about Greece’s economic growth prospects, saying that a lot depended on the duration of military operations in Afghanistan. Our estimate still is that the consequences (of the global economic slowdown) for the Greek economy will be short term, with one big reservation, however. This concerns the following weeks and how the military operations and the political alliance (against terrorism) created by the United States will fare, Papantoniou told reporters, after a meeting with Prime Minister Costas Simitis. Papantoniou added that the government would probably wait until November to submit a final budget proposal. Papantoniou submitted a preliminary proposal on October 1, providing two alternative outcomes for growth, depending on global conditions. The most optimistic scenario forecasts growth equal to 4.3 percent of the Gross Domestic Product, lower than earlier forecasts. The pessimistic one predicts 4-percent growth. Now, Papantoniou is worried that growth could be even slower, affecting above all job creation and the repayment of Greece’s heavy debt. Having handed over the reins of monetary policy to the European Central Bank upon its accession to the eurozone on January 1, 2001, Greece must rely on tight fiscal policies to produce the expected budget surpluses (1.3 percent of GDP in 2002) and the infusion of EU funds and rising construction activity ahead of the 2004 Athens Olympics to sustain economic growth almost double that of the EU as a whole. Asked about the freezing of funds suspected of being used by terrorists, Papantoniou said the matter was secret but added that Greece cooperates very closely with the European Commission and the United States in monitoring bank accounts, stock market investment codes and other capital flows that may be connected to individuals considered terrorist suspects. Papantoniou said also that more than a quarter of the projects funded through the EU’s Third Community Support Framework (2000-2006) have started. We have informed the Prime Minister about the results of (the review of the CSF’s progress), which were very positive… 26 percent of CSF3 is in progress, he said.

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