World Report

PAUL MYLONAS*

he Greek economy has achieved a stunning turnaround from its moribund state in the 1980s. Growth has averaged above 4 per cent during the past five years, remaining strong despite the severe slowdown in its major trading partners. The main sources of renewed growth and confidence are:

1. Entry into the European Monetary Union in 2001 provided exchange rate stability and much lower interest rates, which boosted entrepreneurship.

2. EU structural funds are rejuvenating Greece’s infrastructure and increasing productivity.

3. The region of Southeast Europe is experiencing remarkable change, with the introduction of democratic institutions and ambitious reform.

This dynamism is boosting exports and foreign direct investment with the strengthened relationships helping the region as a whole.

The confluence of these factors has led to a visible increase in confidence and a change in outlook in Greece, which should accelerate the pace of change looking forward.

To this positive environment, one should add the fact that Greece’s reputation is being continuously enhanced – not only winning the European Football Championship and hosting the world’s biggest sporting event. In my opinion, Greece will continue to record a minimum growth of between 3 and 4 per cent for at least the next half decade. The pace is likely to increase as Greek entrepreneurs continue to adopt international best practices. In fact, we are already witnessing the creation of several young and dynamic firms, which can compete at an international level.

Greece’s major comparative advantages are in agro business, modern tourism and services. With all these changes, including the eventual expansion of the European family to include Southeast Europe, and the potential that exists in Russia and the states of the former Soviet Union, Greece is well placed to experience a long period of prosperity.

* Paul Mylonas is Ph. D. Chief Economist of the group, Chief of Strategy and Head of Investor Relations for the National Bank of Greece