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1. Economic Growth
• Strong Growth continues, albeit a slower pace and with a
smaller lead over the European average
• During the last two decades, it has become the imperative of
economic policy and the prerequisite for reforms and
changes in various sectors.
• In 2001-2004, growth rates averaged more than 3
percentage units above EU15. With a per capita income at
80% of European average, it would have taken 8 years to
close the gap.
• In 2005-2008, the growth lead slightly exceeds one unit and
the gap would require 25 years to close, almost a generation.
• Factors contributing to growth, mainly exogenous:
-World demand (including EU)
-Maritime sector
-Tourism
Growth vulnerable to outside uncertainty
• Housing sector: still strong, but strained.
-Ever-increasing interest burden on households
-Property tax uncertainties prevail
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2. Signs of fatigue
• Current account deficit is widening.
By far the highest as % of GDP in the Euro area. (Greece 13,1%, Spain -9,1%, €Z +0.1%)
• Competitiveness deteriorates.
Relative to 2004, more than 10 positions were lost in
international ranking.
• Public investment slows down.
1% of GDP down from the pre-2004 levels
Serious delays in CSF financing.
Low absorption rates, huge bureaucracy ahead.
Increased private investment not (yet?) filling the gap.
Housing sector slows down
• Oil prices threaten purchasing power:
Energy prices up (incl. electricity, natural gas)
Retail prices up.
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3. Fiscal front
• Hopes built on the GDP bubble revision vanished.
The EU authorized only 9% of GDP technical enlargement,
versus 25% required.
• Non-investment primary expenditure risen
Excluding interest payments, public expenditure:
In 2008 expected to reach 20% of new GDP
In 2005 was 19.4% of new GDP
In 2003 was 18.7% of new GDP
• Revenue losses still dramatic.
More than 2% of GDP is lost from the revenues of indirect
taxation, compared to the collection capacity before 2004.
• Embarrassing shift between personal/corporate taxation
2005: Labour taxes 75% above corporate ones
2008: Expected to be 165% above
• Public corporations in critical conditions
-Borrowing requirement to reach 2 bn € in 2008, from 1.3
bn in 2006 and 537 m € in 2003.
-PPC: Profits vanished
-Olympic: Bleak prospects
-GTO: Ownership fight intensifies
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4. New Growth perspectives
• Outwardness: The most critical ingredient
-Regional: Strong potential in SE Europe
-EU:
-International:
• Outward-looking sectors
-Banking
-Maritime
-Tourism
-Energy
-Consumer goods (e.g. food industries)
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5. Education and the knowledge society
• Substantial expansion of education
• Quality upgrading: Questionable
Greece is lagging behind in international competitions
(eg. Mathematical League)
Departmental specialization: Too thin
Several degrees not met with professional
qualifications
Private college recognition: Thorny and dubious
Research institutions: Thin and scattered
Underfunding: 2008: 3,3% of GDP
2004: 3,7% of GDP
No strategy for quality –awarding funding
• …. but hope still survives:
-Evaluation at last started (voluntarily)
-Some universities strive for excellence
-Public perceptions more sympathetic to reforms
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