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09 April, 1998
The Organization for Economic Cooperation and Development (OECD) yesterday made public its bi-annual report on economic conditions in Greece.
According to the report, the Greek economy will continue to improve in 1998 and 1999 if the government continues structural changes and keeps salary raises in check.
The OECD report said inflation decreased by two percentage points in 1997 and the public deficit fell to 4 per cent of GDP during the same year, as compared to 7.5 per cent in 1996.
The report noted that the deficit of the external balance - 4 per cent of GDP in 1997 compared to the 2.5 per cent in 1995 - led to a 14 per cent devaluation of the drachma at its incorporation into the Exchange Rate Mechanism (ERM) last March.
OECD also notes that inflation must reach the European Union average in 1999, while the current transaction deficit must be stabilized in 1998 and 1999.
The organization expects a small slowdown in the growth rate to 3 per cent in 1998, due to the strict fiscal policy and the loss of buying power, while a recovery is expected for 1999.
The report calls for a reduction of the public deficit to 2.4 per cent of GDP in 1998 by reining in public spending by 1 per cent of the GDP, but it estimates that it will end up at 2.9 per cent.
It also calls on Greece to continue structural changes in the job market and the public sector, which has a considerable deficit.
Finally, the organization noted that the danger of a recession will be decreased by the effective application of the 1998 budget.
Source: Athens News Agency