Contributors to this issue: Gikas Hardouvelis, Platon Monokrousos, Constantine Papadopoulos, Costas E. Vorlow, Theodosis Sampaniotis
Publication: Greece Macro Monitor, Eurobank Research, July 2006
Key points:
- We revise our 2006 real GDP growth forecast upward to 3.7% from 3.4%, as higher domestic demand growth overtakes the slack in net exports
- Strengthening residential construction activity, higher public investment spending and improved business sentiment point to a dynamic bounce in investments following their year-long slump in 2005
- Demand-side pressures, persistently high oil and raw material prices and above-inflation increases in private sector wages are likely to maintain upside price pressures, with annual inflation remaining above 3.0% both this year and the next
- Expenditure restraint and strong revenue growth over the first half of 2006 strengthen our belief that the authorities will succeed in reducing the 2006 general government budget deficit to no more than 3.0% of GDP
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