05 April, 2006
The Economist Group's 10th "Roundtable with the Government of Greece", a more-or-less 'fixture' on the local political and economic landscape over the past decade, began in Athens on Tuesday with the Economist Intelligence Unit's (EIU) ubiquitous forecasts for the coming period, with Greece given "mixed" but largely positive short-term ratings.
EIU Editorial Director Daniel Franklin again repeated his group's forecast of 3.1 percent GDP growth for the Greek economy in 2006 and 2.9 percent in 2007, figures slightly down from 3.7 percent in 2005 and the brisk 4.7 percent of "Olympic year" 2004.
"This is in line with the overall global economic growth (average) and way above the euro-zone average, as it should, because it (Greece) has some catch-up to do," Franklin told delegates.
In touching on one of the Greek government's toughest economic challenges, namely, the effort to slash the budget deficit below the EMU-mandated limit of 3 percent, Franklin predicted that the deficit will "fall sharply" but still be above the figure in the short term. Additionally, he predicted that inflation will also continue to decrease in the east Mediterranean nation of 11 million.
Conversely, both Franklin and Laza Kekic, the EIU's country forecasting services director, pointed to the macro-economic environment, taxes and the labor market situation in Greece as sectors that burden the country's overall and regional ranking in an EIU grading system, 44th out of 82 countries overall, and 17th out of 18th regionally.
Both men said the five-year forecast for Greece nevertheless predicts a distinct improvement, a development that, however, that comes amid a rapidly improving environment both internationally and regionally, especially in central and eastern Europe.
The weaker points, in terms of Greece's overall economic performance, were the level of Foreign Direct Investments (FDIs) and fiscal policy, as they said.
Regarding the global economic situation, the general consensus was optimistic, with sustained but "slightly" lower growth rates predicted for China and India.
"We've had the fastest growth rate internationally over the last two years in the past quarter of a century," he said.
The biggest risk at present, according to Franklin, is higher interest rates’ impact on the dollar and the real estate market in countries where it boomed over the past decade, such as the United States, Australia, Spain and Britain, among others.
Finally, both men commented on closely watched situation in France over the government's labor reform law, with Kekic referring to a "huge reaction to a really minor reform" that accounts for a "huge political mistake" in picking a make-or-break fight over a marginal change.
Source: Athens News Agency