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GREECE

NEWS REPORT
 

 

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: 091 - (26/11/04)

Karamanlis retains popularity
Costas Karamanlis keeps a steady level of public support in Greece, according to a poll by VPRC released by SKAI Radio and Kathimerini. 53 per cent of respondents believed in November that the current prime minister is the most qualified person to govern the country, exactly the same proportion as in April. Karamanlis led the conservative New Democracy (ND) to a victory in the Mar. 7 parliamentary elections, securing 165 seats in the Greek Parliament. The Pan-Hellenic Socialist Movement (PASOK) had administered the government since January 1996.
Current PASOK leader George Papandreou-a former foreign minister-garnered the support of 25 per cent of respondents in November, again exactly the same as in April.

Athens intensifies talks with Skopje over state name
In early November the United States decided to refer to the Former Yugoslav Republic of Macedonia (FRYOM) as "the Republic of Macedonia." The country's name has long been a matter of debate, as Greece expressed concerns over future territorial claims to one of its provinces, which is also known as Macedonia.
Greek foreign minister Petros Molyviatis criticized the U.S. government's rationale, declaring, "Apart from our protest, I noted the many negative effects that this unilateral U.S. decision will have." Karamanlis called the decision "unfortunate" and "untimely." 
Athens has shown readiness to enter into intensified talks with Skopje over the disputable issue of the name of the Former Yugoslav Republic of Macedonia.
The UN-sponsored discussion aims to find a mutually acceptable solution to the name dispute, Greek cabinet spokesman Thodoris Rousopoulos said quoted by local media. He added that Premier Karamanlis and government members plan a series of meetings with Greek politicians, aimed at elaborating a national consensus on the issue.
Though Washington now recognises Macedonia's constitutional name, the EU intends to continue using the name "Former Yugoslav Republic of Macedonia", Rousopoulos was cited saying. EU External Relations Commissioner Chris Patten also declared the Union's stance to keep the status quo over Macedonia's name. Greece is used to referring to its northern neighbour simply as Skopje after the name of its capital city.

Wider implications of the name dispute
Those who might query the predominance of the economy in international relations might compare the reactions sparked by the US decision to recognize FYROM as the "Republic of Macedonia." On the Greek side, there was indignation and anger. Logically, the people of FYROM should then have reacted with joy and enthusiasm. Instead, they responded with doubt and unease - for the simple reason that both their economy and their accession to the EU and NATO depend more on Greece than on the USA.
With unemployment at over 40 percent and average wages of just 190 euros a month, FYROM's people are well aware that the 200 Greek enterprises, both large and small, that operate within their country's borders are a basic pillar of their economy. Equally, they have realized Greece is a natural, indispensable bridge to Europe and the Atlantic alliance. They thus do not regard their US baptisal as the "Republic of Macedonia" as non-negotiable; quite the contrary.

Economy in difficulties
The boost to the Greek economy imparted by the Olympic Games is abating as the international context of its performance is turning sour. This is especially true in the energy field. Although Greece has a large oil tanker fleet, it does not possess significant hydrocarbon deposits itself, having to import their products from abroad.
Rising prices in international oil markets will have an impact on Greek consumers, enterprises, the economy and the state budget, the Greek Industries Union (SEB) said in mid-October. SEB's President Odysseas Kyriakopoulos told reporters that rising fuel prices were burdening the cost of production-transportation of products and stressed that "it would not be irrational" for the added cost to burden consumer prices in the country. 
Higher energy cost, SEB said, would affect economic growth in 2005 and state revenues, a prospect putting in doubt a government target to contain fiscal deficit below 3.0 per cent of GDP, as envisaged by the EU's Stability Pact. 
Kyriakopoulos recommended changes in a draft budget plan for 2005, based on the assumption that international oil prices would average $40 per barrel next year and currently moving above $50. 
He also urged for more measures to reduce spending and to promote privatisations. 

Greece sets out details of return to fiscal propriety in letter to Brussels
The new government is heeding this advice. Greece will reduce its budget deficit from a projected 5.3 per cent of gross domestic product (GDP) this year to 2.8 per cent in 2005 by a combination of seven revenue-boosting and expense-reducing measures, Economy and Finance Minister Giorgos Alogoskoufis notified the European Commission in a letter in early November.
After meeting German counterpart Hans Eichel in Berlin, Alogoskoufis said that he had found a very good climate and understanding for the Greek positions.
Greece has recently been widely rebuked in the EU for inconsistent reporting of its public financial data in recent years, after conducting a review which showed fiscal deficits considerably above those planned in its budgets. The issue has been a major bone of contention within Greece, with the present ruling party accusing its predecessor, PASOK, of consistently falsifying and misrepresenting data.
Alogoskoufis said that Greece does not expect the imposition of any sanctions, as there is no legal basis for this, and again dismissed suggestions that the country is "under supervision" or a "special regime.

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BANKING

Bank of Greece says C/A showed surplus in August


The Bank of Greece announced recently that its current account showed a surplus in August, which was considerably bigger than the one reported in the same month of 2003, New Europe reported.
"This improvement is mainly due to a large increase in the services surplus and - to a much lesser extent - to a rise in the transfers surplus," the central bank said in a statement.
"By contrast, both the trade and the income account deficits grew. Specifically, underlying the widening of the trade deficit were on the one hand an increase in the non-oil trade deficit and, on the other, a rise in the net oil import bill, which almost tripled, reflecting substantially higher oil prices in the world market," it added. "The services surplus improved considerably, mainly as a result of two factors: first, the substantial growth of net travel receipts, which were affected favourably by the holding of the Olympic Games, and second, the rise in net transport receipts (mainly from shipping)."
Bank of Greece said gross travel receipts surged 25.4% year-on-year in August 2004. Net receipts from other services also rose, mainly as a result of a rise in receipts from services associated with the holding of the Olympic Games (notably television broadcasting fees), it explained.
"The income account deficit grew owing to a rise in net interest, dividend and profit payments. Finally, the growth of the transfers surplus reflects an increase in net EU transfers to general government."
In the first 8 months of the year, the current account deficit narrowed considerably (by €1.58bn) over the same period of 2003, falling to €3.15bn, the central bank said. "This development mainly reflects a substantial rise in the services surplus and, secondarily, an increase in the transfers surplus, which, taken together, more than offset the strong rise in the trade deficit. The trade deficit grew by €1.82bn relative to the same period of 2003," the statement read.
"Specifically, a €2.4bn (or 12.9%) increase in the non-oil import bill more than offset a €879m (or 13.9%) rise in non-oil export receipts, whereas the net oil import bill increased by €345m," the central bank commented.
The services surplus grew by €2.8bn, mainly owing to a big increase in net transport receipts (mainly from shipping) and, to a lesser extent, a rise in net travel receipts and a decrease in net payments for other services.
With respect to the financial account balance, €165m was recorded under direct investment. According to the central bank, the most significant direct investment in Greece by non-residents was the rise in Paneuropean Oil and Industrial Holdings SA's participation in the capital of Hellenic Petroleum SA.
In January-August 2004, non-residents' direct investment in Greece reached €925m, while residents' direct investment abroad came to €324m, resulting in a net inflow of €600m under direct investment, the central bank said.

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CREDIT RATINGS

Banking leaders and competitiveness

International ratings agency Moody's Investors Service said in its Banking System Outlook for Greece report published recently, that the stable ratings outlook for Greek banks reflects the gradual banking system transformation that is leading to stronger institutions, the considerable improvement in the banks' recent financial performance and the satisfactory growth prospects for financial services in a relatively unbanked market, New Europe reported.
But this outlook also incorporates the banks' growing credit risk profile, stemming from the rapid credit growth witnessed during recent years and the likely impact on credit quality of a possible economic slowdown, the report said.
The agency said the Greek banking system has been going through a significant transformation in recent years, characterised by privatisations, mergers and acquisitions, and by increased focus on strengthening market position and business franchise.
Moody's expects these adjustments to continue over the medium term, leading to a stronger banking sector that is well positioned to facilitate the country's future economic growth, the ratings group said in a statement.
"The Greek economy continues to expand apace, growing faster than the EU average. Low interest rates, high consumer confidence, the large inflow of EU funds and the preparations for the 2004 Olympic Games have propelled economic growth," said Constantinos Pittalis, a Moody's VP/senior analyst and author of the new report.
But, with these dynamics coming to an end in the period between 2004 and 2006, economic growth is expected to slow down in 2005. Beyond this period, the challenge is for Greece to move forward with the basic structural reforms to improve its economic competitiveness and to support a high enough economic growth to achieve European Union convergence, the report said.

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ENERGY

Greece to proceed with gas utility sale to Spain

The Greek government will go ahead with the sale of gas utility company DEPA to Spain's Gas Natural, a senior finance ministry official said recently, Deutsche Presse-Agentur (dpa) reported. 
"The priority of the government in its privatisation programme will be the sale of 34-35% of DEPA to Spain's Gas Natural," Deputy Finance Minister, Petros Doukas, said.
Gas Natural agreed in principle to purchase 35% of DEPA for €285m (US$351m) in February, but the deal was delayed by a change in Greece's government. The deal stands to be the largest venture in Europe and the biggest investment by a Spanish company in Greece. DEPA is a gas importer and transport company.
Greek Prime Minister, Costas Karamanlis, said on October 11th during an International Herald Tribune conference that his government will seek to gain €1.5bn in revenues from privatisations in 2005. According to him, privatisations were necessary if the government stood to reach its goal of cutting the budget deficit to 2.8% of gross domestic product (GDP) next year from a forecast 5.3% this year.
Doukas also said the government will continue its search for a buyer for debt-ridden state airline Olympic. "No business group, either in Greece or abroad, has yet shown interest due mainly to the fact that Olympic Airlines is still posting losses of at least €100m annually," he said.

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FOOD & DRINK

CCHBC nears settlement of EU probe

The Coca-Cola Hellenic Bottling Company (CCHBC) SA announced recently that for the last five years, the Directorate General for Competition of the European Commission (EC) - the executive arm of the European Union (EU) - has been examining the commercial practises of the company and bottlers in Austria, Belgium, Denmark, Germany and the United Kingdom. For its part, CCHBC participated in talks with the EC to identify and address the commercial practices under review, New Europe has reported.
The company and other groups who took part in the talks recently submitted a proposal in the form of a draft undertaking that addresses all such practices in EU. The EC accepted this undertaking as a basis for terminating its investigation, CCHBC said.
The Commission also advised that it intends to formalise the undertaking as a legally binding commitment pursuant to new provisions in regulation (EC) No 1/2003 which has recently come into force.
"We are happy that we have been able to reach an agreement with the Commission," said Doros Cosntantinou, managing director of CCHBC. "We have always sought to compete fairly and in compliance with the law. The undertaking will provide clarity as to the application of European competition law to our business."

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FOREIGN COOPERATION

Kyrgyzstan, Greece sign cooperation accords

Kyrgyz President, Askar Akayev, met Greek President, Konstandinos Stefanopoulos, in Athens as part of an official visit to Greece recently, AKIpress News Agency web site reported.
There was an exchange of views on a wide range of issues of cooperation between the two countries at the meeting. This was then followed by talks with other members of the delegation present. 
Speaking about cooperation, Akayev said: "It is 12 years since diplomatic relations between the two countries have been established, and this is a good beginning to build close and efficient cooperation. We have good prospects to raise Kyrgyz-Greek relations to a higher level and expand relations in the international arena." "The aim of my visit is to raise our relations to a different qualitative level and to lay the foundation for their legal basis by signing bilateral documents," Akayev said.
Akayev also said that cultural, educational and scientific aspects of cooperation should also be developed. Akayev went on to say: "Greece is one of the capitals of international tourism, and we need Greek experience to develop this sector, we hope to intensify cooperation in this field."
In his speech Stefanopoulos said that Kyrgyzstan occupies a very important place in the Central Asian region, and this is very important in bilateral relations. He thanked Akayev for supporting Greece to become a temporary member of the UN Security Council.

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