A legacy to exploit

The prime minister’s speech at the Thessaloniki International Fair today launches a period of crucial developments in the economy. It will be a time of challenges and opportunities – not always immediately discernible. The economy, now deprived of the tonic of infrastructure projects and under increasing fiscal strain, will have to adapt to a new environment. One of the government’s main priorities will be to restore fiscal balance. The administration must trim deficits, contain borrowing and boost growth so as to stave off the threat of stagflation. The economy in the post-Olympic period must serve incompatible aims. Controlling public finances is never an easy task. Economic policymakers must rein in spending, raise state revenues and curb demand. The government will also have to resist a wave of demands from various social groups. Serious as the fiscal crisis may be, its impact on the economy will not be felt as much as it was in the past, when the government also sought to protect the national currency. The government’s economy officials now have the luxury of being able to hammer out a balanced policy that will cater to fiscal concerns and, at the same time, take measures to bolster growth, making it easier to keep debt and deficits in check. Another aspect is the invisible post-Olympic legacy. The headache of Games-related spending is gone, and the country can only hope to gain from the good publicity it won in August. The government can channel more EU funds toward the provinces, while it has good reason for anticipating a parallel surge in tourism and foreign investment. Costas Karamanlis’s administration must exploit this legacy and reinforce it with a set of initiatives on the microeconomic level with the aim of meeting the dual challenge of fiscal stability and economic growth.

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