Some good news and a warning

The Greek economy remains on track. The good news has, once again, been confirmed by Bank of Greece Governor Nicholas Garganas – an official who was appointed by the Socialist administration. According to a central bank report due to be presented in Parliament today, the Greek economy’s growth rate will continue to hover at high levels (note that gross domestic product, or GDP, is predicted to rise by 3.8 percent), while inflation is expected to drop to 3.3 percent. The report also forecasts a reduction in Greece’s fiscal deficit. However, the Bank of Greece document warns that the economic upswing and high growth rate will prove short-lived unless the conservative government moves ahead with its much-heralded reforms and structural changes. The administration of Prime Minister Costas Karamanlis should welcome the conclusions of the report and act on Garganas’s frank and responsible recommendations. It is common knowledge that the sea of red tape and the deeply entrenched system of patronage and corruption have pushed the country to the bottom of the European Union tables as regards its lack of foreign direct investment. At the same time, the country’s extremely vulnerable tax system and the inelastic labor market leave no room for further delays in pushing through the requisite reforms.