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GREECE


 

 

In-depth Business Intelligence

Key Economic Data 
 
  2002 2001 2000 Ranking(2002)
GDP
Millions of US $ 132,834 117,200 112,000 28
         
GNI per capita
 US $ 11,660 11,430 11,730 48
Ranking is given out of 208 nations - (data from the World Bank)

Books on Greece

REPUBLICAN REFERENCE

Area (sq km)
131,940

Population 
10,665,989

Capital 
Athens

Currency 
Euro

President 
Costas 
Stephanopoulos

Private sector 
% of GDP
over 60%

  

Update No: 090 - (27/10/04)

PM Karamanlis: "A new beginning for Greece"
The great event in Greece remains the Olympic Games this past summer, which has changed it for good. The feared terrorist attack never materialised and the Greeks got it about 'right on the night.'
In a television address to the nation on the night after the close of the Athens Olympic Games, Prime Minister Costas Karamanlis said they had been a "milestone in the country where they were born and revived, a new beginning for Greece which had surprised the whole world and proved that it can forge ahead."
The outstanding success of Greece's effort, Mr. Karamanlis noted, is now being recognized all over the world where, up to a few months ago, there were whispers of concern and cries of doubt. "The international community now agrees that Greece has distinguished itself for the high level of hospitality, culture and security it provides for everyone, with complete respect for human rights. Greek society has proved that it has great potential, abilities, and unquestionable virtues . . . The success of the national effort fills all Greeks with a sense of satisfaction and pride."
Mr. Karamanlis went on to congratulate "all the Greek citizens who made these games a reality by their sacrifices." He had special words of praise for the performance of Greek athletes, who won a record 16 Olympic medals, as well as for all the athletes of the world. Congratulations were also due to the IOC and to the Athens 2004 Organizing Committee. Also, he said, they must go to "all the Greek and foreign volunteers who unselfishly gave their very best both inside and outside the stadiums."

Drawing on the Success of the Games
In generous mood Karamanlis also noted the contribution of the previous Simitis government and of the country's municipalities, often run by the opposition Socialist Party-as well as of public agencies and the private sector. With collective self-discipline and individual involvement, Greeks "not only proved that they are good hosts, but also proved their readiness to turn a new page, opening a new chapter for Greek society."
Looking to the future, Mr. Karamanlis said "we must draw on the success of the Games internationally, projecting a Greece which achieves its goals. We must attract tourism and investments; we must make use of the installations left behind by the Olympics…because they are high-tech and high-cost projects which Greek citizens paid for with their hard-earned money. We must prove that this great Greek summer is not a parenthesis. We must prove that the success of such a great and complex undertaking is not limited to two weeks of festivities. It is the milestone of a new era…an investment in the new period that has opened for Greece, and capital for the years to come." 

Counting the costs
Nevertheless, despite all this high-flown rhetoric, it would be unwise not to recognise the downside of the event. The cost of the Olympics, combined with previously existing budgetary and economic problems, has left Greece with a considerable burden. The General Accounts Office has been focusing on determining the extent of the post-Olympics era inefficiencies and assigning an actual cost size to the Games. The country is entering a period of self-constraint, as financial figures balloon out of proportion. 
Deputy Economy Minister, Petros Doukas, estimates that the cost of the Olympic Games will surpass 7 billion euros. Most likely it will approach 8 billion euros, as bills are piling up with no unified administration procedures. 
The financial challenge Greece faces is illustrated by the increase in the public debt, which has already surpassed last year's 195 billion euros, and is expected to exceed 210 billion euros by the end of 2004. The rising numbers are putting pressure on the government, which is being forced to place limits on economic policy. Greece must present a reliable economic control plan, in the face of its massive debt, to re-establish the country's creditability. 
According to Doukas, the government should take specific initiatives that would allow for the controllable rejuvenation of the public sector and at the same time create an attractive environment for foreign investment. 
The most serious problem with the public debt is the fact that a large portion of the state budget is inelastic. Almost 40 per cent covers wages and pensions, another 30 per cent goes towards interest, and 20 per cent to 25 per cent is earmarked for financial aid grants. A mere 5 per cent to 10 per cent of the budget can be influenced directly by governmental decisions. Annual wage and pension increases, capped at 3 per cent, raise that portion of the budget by 5.5 per cent, further reducing the amount left for discretionary spending. 
The large public debt increase rules out hopes of a decrease in service costs. Under these circumstances, strategic actions are needed if Greece is to have any hope of bringing its debt servicing expenses under control. One much-discussed way of doing this is through the privatisation of large public organisations, such as the phone company, the water company, and electricity provider. Meanwhile, cost control programmes have been implemented in mass transportation and all other public sectors that operate within a bank-debiting framework supported by the Greek Public Office. 

But upbeat prospects open up; the 'Post-Olympics' era
It is perfectly understandable, however, that at this turning point in the world's perceptions of Greece the prevailing official tone is upbeat. Minister of State and government spokesman Thodoris Roussopoulos on October 18th focused on the extraordinary promotion in Greece's image in the wake of the successful holding of the Athens Olympic and Paralympic Games. 
In presenting results of a seven-nation, 7,000-person survey on Greece's image to participants at a one-day, International Herald Tribune-sponsored conference in the Greek capital, Roussopoulos said the categories of "safety", "quality of services" and "creativity", among others, all rose in ranking.
Roussopoulos also more-or-less defined the Karamanlis government's communication strategy vis-a-vis international public opinion, saying Greece must exude a unified image abroad, instead of the piecemeal and often amateurish campaigns that were recorded over the past two decades.
"Our emphasis should be on tourism, we want to attract more tourists, knowing that the competition in the Mediterranean is very stiff," he said, adding that "natural beauty", "culture" and "family values" still remained the most identifiable traits that foreign respondents associated with Greece.
"Greece Doing Wonders" was the general promotional moniker unveiled at the conference, entitled "Investment & Business Prospects in Greece's Post-Olympics Era".

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BANKING

Arapoglou highlights NBG's moves to enhance growth

National Bank of Greece Chairman, Takis Arapoglou, was recently in Santorini, one of Greece's renowned islands to speak to 130 professional and businessmen about the bank's plans to enhance growth for the country, New Europe has reported.
In his speech, Arapoglou said the bank is particularly keen to serve small, medium and large size businesses, as well as professionals, especially in Santorini, where the bank has been active since 1842. "The region presents considerable scope for further development. By developing infrastructure in general, we can produce more favourable conditions and enhance the potential for business and tourist development," the NBG chairman said. "The Santorini branch manager and officers and National Bank of Greece in general, with its long experience, are here to support the business community in its efforts to achieve growth and development," he added.
Arapoglou also visited the archaeological site of Akrotiri, where he was guided around the excavations by Professor C Doumas. It should be noted that National Bank is a sponsor of the excavation works in Akrotiri, a bank statement said.
During his trip to the northern cities of Kaval and Drama, Arapoglou, along with the deputy chairman and the deputy CEO of National Bank of Greece, met with 300 businessmen and professionals, and discussed matters of mutual concern. The general managers of consumer banking and human resources, respectively, were also present.
In his address to businessmen and professionals, Arapoglou reiterated that the bank is particularly keen to serve small-, medium- and large-size businesses, as well as professionals. Among other things, Arapoglou pointed out that: 

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CREDIT RATINGS

Greece outlook cut to negative vs stable - S&P

International rating agency Standard & Poor's on September 13th said it had revised its outlook on Greece to negative from stable, reflecting a deepening deterioration of public finances and lack of progress in lowering the public debt ratio as a share of national output, New Europe reported. 
At the same time, Standard & Poor's affirmed its A+ long-term and A1 short-term sovereign credit ratings on the republic.
General government debt is forecast to reach 112% of GDP by the end of 2004, up from 106% in 2000, which was on the eve of Greece's EMU entry, S&P said.
"Traditionally weak expenditure discipline has recently been exacerbated by declining government revenues as a share of GDP," said Standard & Poor's credit analyst Moritz Kraemer.
"Consequently, the general government deficit is expected to reach 5.4% of GDP this year, with the cyclically adjusted balance close to 6.0% of GDP. Approximately 1.0% of GDP of the 2004 deficit is related to nonrecurrent spending on the Olympic Games.
"The negative outlook reflects the significant risks to fiscal consolidation in Greece. "Fiscal performance is of paramount importance for sovereigns taking part in monetary unions, as critical policy instruments to respond to economic shocks have been surrendered to the multilateral level," Kraemer said.
The new government enjoys a strong mandate and intends to reduce its deficit to less than 3.0% of GDP in 2005, which is very ambitious, but not impossible if the political will exists for forceful action to curtail current expenditures.
"Failure to address the fiscal imbalances with lasting structural measures, and in particular to contain current expenditure, would lead to a lowering of the ratings on Greece within one to two years," said Kraemer.

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FOOD & DRINK

Coca-Cola HBC optimistic

Coca-Cola Hellenic Bottling Company recently announced it believes 2004 will prove to be fruitful despite the current sentiment on the global market, New Europe has reported.
"Given the prevailing uncertainty in the market conditions, we felt it appropriate to update the investment community on current trading and full-year expectations for 2004 ahead of an investor roadshow in the United States," said Doros Constantinou, managing director of Coca-Cola HBC. "As we come to the end of the third quarter, we have become increasingly confident that our strong operating performance has enabled us to overcome, to a large extent, the adverse macroeconomic and weather related conditions influencing our established and developing markets."

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FOREIGN ECONOMIC RELATIONS

Greek, Turkish foreign ministers discuss bilateral relations

Greek Foreign Minister, Petros Molyviatis, met with Turkish counterpart, Abdullah Gul, at the UN head-quarters in New York, and reviewed the countries' bilateral relations during a 45-minuted meeting recently, ANA News Agency reported. 
In statements made to the press after the meeting, the two ministers expressed satisfaction with the improvement of relations between Greece and Turkey. Molyviatis confirmed "the good relations" that exist between the two countries, citing the realisation of two meetings over recent days as a small example.
As an example of the "good climate" existing between the two countries, the Greek minister emphasised that various military exercises had been cancelled, most importantly a military exercise in Cyprus, which was cancelled in consultation with the Cypriot government - "an indication of the trust" that has developed between Greece and Turkey.
Gul said that the measures aimed at reinforcing trust between the two countries were discussed and the two ministers decided that this process needs to be accelerated.
Aside from the Greek-Turkish relations, the Turkish minister said that the Cyprus issue was also discussed, as was Turkey's prospects for EU membership. He said that he and Molyviatis reviewed the Cyprus issue and discussed the issue of "EU reforms."
Additionally, Gul reiterated the invitation he has extended to Molyviatis for an official visit to Ankara.
Finally, Gul said that the Iraq situation was also discussed and he presented the Greek minister with Turkey's position on the matter.

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