Greek economy suffers as GDP growth slows

According to the latest figures announced by the central bank of Greece, the economy of has been hit harder than expected with growth of only 0.5 percent being expected this year after a growth rate of 3.1 percent in 2008.

This has roused the opinion that both fiscal tightening and reforms are urgently needed in order to ride the storm and to help sustain growth through this difficult period.

The two main pillars of the economy, tourism and shipping, have been hit in the current crisis and the government has big budget deficits and big debts which has left little in the way of sanctioning a fiscal stimulus.

It has been argued that the best way to allow the government to manoeuvre is to focus funds on infrastructure and boost activity, which in turn is hoped that this will contain public debt which is running up to the tune of 250 billion euros.

With a delicate but daring combination of fiscal discipline and daring public sector reforms, debt might be more manageable but the need to apply long-term policy measures is of paramount importance.

George Provopoulos, the Central Bank governor and ECB council member, has called for restructuring in order to deal with internal imbalances and weaknesses that are increasing external debt.

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