Greece focuses on competitiveness as OECD warns of deep recession

08:18, May 27, 2010      

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Greece will balance the harsh austerity measures with growth, focusing on enhancing the competitiveness of the national economy, Greek Prime Minister George Papandreou said on Wednesday during a cabinet meeting.

The Greek government will also push for privatization of state companies that are expected to be announced next week, government sources added in comments to Greek media.

According to the same sources, the privatization process concerns companies in the sectors of energy, infrastructure and tourism, which is regarded as one of the most significant sources of revenues for Greece.

Greece sunk in an acute economic crisis that brought its economy on the brink of collapse this year. The government was forced to introduce austerity measures and reforms over the past few months as preconditions to receive financial aid from other euro countries and the International Monetary Fund.

During Wednesday's cabinet meeting, Papandreou rejected other European partners'idea that the issue of low competitiveness compared to non-European countries, can be tackled with cutbacks on employees' wages and pensions.

"The way forward is through a better quality of products and services and a new development model," said Papandreou.

"Europe should focus on growth and capitals available around the world that can be invested, but should be better monitored, so that we will avoid further phenomena of speculative games," the Greek leader added.

Regarding the Greek crisis, Papandreou asked for the strengthening of domestic production and consumption, transparency in the operation of the local market and a fight against expensiveness.

According to a recent report of the non-governmental Greek Consumers Center, which compared prices of basic products across the eurozone in April 2009 and April 2010, Greece reported the most raises in prices. The inflation in Greece stood at 4.7 percent, while the average in the eurozone was 1.5 percent.

Another report released on Wednesday painted a bleak image of Greece in the near future. According to the Organization for Economic Co-operation and Development (OECD), Greece will face a deep recession until the end of 2011 and an increase in unemployment at 14.3 percent from 12.1 percent this year.

OECD's experts warned that the austerity measures will have a negative impact on development and stressed that the implementation of structural reforms is more than necessary. In case the measures and reforms will not be fully implemented under the pressure of Greek labor unions and protesters, Greece will face more difficult times and recovery will be endangered.

OECD has predicted the Greek national economy will shrink by 3. 7 percent in 2010 and 2.5 percent in 2011 and inflation will stand at 3 percent in 2010 and 0.3 percent in 2011, due to reduced economic activity.

The positive forecast is that the Greek fiscal deficit will shrink to 8.1 percent of GDP by the end of this year and 7.1 percent in 2011.

Source: Xinhua


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