Athens News Agency: News in English, 07-10-10

Athens News Agency: News in English Directory - Previous Article - Next Article

From: The Athens News Agency at <http://www.ana.gr/>

CONTENTS

[01] BoG: Reforms needed to maintain high growth rates

[02] Top gov't meeting focuses on illegal immigration

[01] BoG: Reforms needed to maintain high growth rates

The central bank, in its report, estimated that the impact from turbulence in international credit markets will be limited vis-a-vis the Greek economy, with GDP growth rate slightly up from 4.0 percent this year, after a 4.3 percent growth rate in 2006. Economic growth will continue to be based on domestic demand.

Investments are expected to rise by 8.0 percent this year, slightly down from 2006, due to a significant slowdown in investments for new homes. Higher economic growth is accompanied by a 1.4 percent annual increase in employment in the first half of the year, while the unemployment rate fell to 8.6 pct of the workforce during the same period.

The central bank said the contribution of external trade to GDP growth is expected to be negative this year, as in 2006, with the country's current accounts deficit expected to reach 14 percent of GDP in 2007, from 12.1 pct in 2006. This development reflects mainly a widening trade deficit, higher interest payments and a higher shortfall in the vessels balance. This negative trend overshadows improved developments in shipping and tourism foreign exchange receipts.

A persisting high current accounts deficit and its funding with capital inflows from abroad has lead to a worsening of the country's negative net international investment position (the public and private sectors' net obligations abroad) to 92.2 pct of GDP at the end of 2006 from 51.1 pct at the end of 2001.

The average annual inflation rate, measured by the harmonised consumer price index, is expected to ease this year, but the core inflation rate is expected to rise to 3.1 pct on average this year, from 2.9 pct in 2006, reflecting inflationary pressures from strong demand and higher labour cost per unit.

Greek households' debt (including securitized loans) totalled 46.9 pct of GDP in August 2007, up from 44 percent in December 2006, but down from a 53.5 percent average in the Eurozone. However, the interest rate margin remains high in Greece (4.19 pct in July) compared with a 3.05 percent figure in the Eurozone.

The Bank of Greece said the Greek credit system continued to enjoy a high degree of stability, based on return on equity, capital adequacy and liquidity indexes in the first half of the year. The central bank noted that credit risks eased in the system.

The central bank, in its report, said the Greek economy continued facing macro-economic imbalances and structural weaknesses that needed to be dealt with effectively to ensure long-term economic growth and employment. The bank noted that a persisting high inflation rate and a widening current accounts deficit could be attributed to: high consumption and home buying investments, a declining international economic competitiveness of the country (because of higher labour costs) and a lower production capacity growth rate compared with domestic demand growth rate.

The central bank bank underlined that the Greek economy needed a transformation to ensure long-term high growth rates, from an economy based on domestic demand to an export-orientated economy. The main precondition for this transformation will be reducing macro-economic imbalances, such a continuing a fiscal consolidation effort and ensuring price stability. Also, the country needed to improve its savings rate and to improve the composition of its investments, while promoting structural reforms in the labour and product markets.

Achieving significant primary surpluses in the coming years needs first to reduce primary spending on a permanent base and ensuring higher revenues. The central bank said a further reform of the tax system was also needed along with structural changes in spending.

The Bank of Greece noted that reducing early retirement could significantly contribute in reducing imbalances and improving the financial position of social insurance funds, along with a better use of the country's workforce. A consolidation of social insurance funds will also help in the rationalisation of the system. The central bank also recommended measures to boost the country's demographic condition and strengthen the employment and productivity rates.

The announcement by the government of a wide social and political dialogue towards reforming the pension system is unquestionably a positive step, the report noted. The central bank also urged that wage increases be compatible with a price stability policy and further deregulate domestic markets.

The Bank of Greece said average real wages grew markedly in the last decade, along with a significant convergence of average wages in the country with the Eurozone average level.

Caption: A file photo, dated February 2007, shows the exterior of the Bank of Greece building in downtown Athens. ANA-MPA / P. SAITAS.

[02] Top gov't meeting focuses on illegal immigration

In an announcement issued afterwards, attending ministers stressed the need for international cooperation in coping with the phenomenon, urging neighbouring Turkey, in particular, to increasing controls on its own often porous borders.

Those attending included Foreign Minister Dora Bakoyannis, Deputy Foreign Minister Yiannis Valinakis, Interior, Public Administration and Decentralisation Minister Prokopis Pavlopoulos (whose ministry is now also in charge of the law enforcement portfolio), Defence Minister Evangelos Meimarakis, Merchant Marine and Island Policy Minister George Voulgarakis and Deputy Public Order Minister Panagiotis Hinofotis.

The Greek ministers noted the need to better coordinate action between their respective ministries and greater cooperation with the European Union in combatting what was a challenge of international scope, one that could only be dealt with through cooperation on a global, international and bilateral level.

According to an announcement made afterwards by foreign ministry spokesman George Koumoutsakos, the ministerial meeting made an in-depth appraisal and evaluation of the phenomenon of illegal immigration and examined ways to better handle and deal with it.

Among the observations regarding illegal immigration listed in the announcement, ministers noted EU concern with an effective approach to illegal migration and the fact that Greece's borders were at the same time a border of the Schengen area, while the greater part was also an external border of the EU, as well as Greece's active participation and contribution in all policies, initiatives and EU actions for fighting illegal migration.

"Apart from the Schengen area, we participate in the European organisation for management and operational cooperation at the external borders of member-states, known as FRONTEX. We also actively participate in formulating the European system for the surveillance of external borders (EUROSUR), in the European Patrols Network and in promoting the creation of a Common European Coast Guard, which was a Greek initiative," Koumoutsakos said.

The announcement additionally noted the need for optimal cooperation of all ministries and organisations in Greece on a national level, as well as enhanced cooperation and support from the EU, while noting that on a bilateral level Greece put special weight on enhanced cooperation with all neighbouring countries and those with shared borders.

It added that the necessary international and inter-state cooperation would have to be based on well thought-out and effective national policies for dealing with illegal migration, especially between neighbouring states, while inefficient policies actually encouraged the problem, especially toward neighbouring states

In this context, the ministers ascertained a recently increased flow of illegal immigrants toward the eastern land and sea borders of Greece and said that Greece, apart from further reinforcing its own policies with specific measures, also expected a substantial response and cooperation from Turkey in the framework of existing bilateral cooperation and called for more rapid progress in concluding the EU-Turkey rapid readmission agreement.

Caption: A file photo, dated Saturday, Aug. 6, 2004, shows dozens of detained illegal immigrants in southern Crete. ANA-MPA / V. VARDOULAKIS.

Athens News Agency: News in English Directory - Previous Article - Next Article