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"Officially, we are sticking by our plan, which is 3.9%," he told Dow
Jones Newswires in an interview. Noting 2004 fourth quarter growth was
4.2%, which was after the Athens Olympic Games, he said, "It appears
the economy has a lot of steam."
The
government, which took power in March of last year, has reformed the
tax code, slashed corporate taxes to 25% by 2007 from 35% in 2004, cut
spending, streamlined regulation and enacted an investment promotion
law to foster growth in less-developed regions of the country, the
minister said.
Last month, however, Alogoskoufis said gross domestic product growth
this year may be lower than expected. While he didn't give a revised
target, other experts have given figures lower than the official 3.9%
target.
"At
the time I made the statement, I felt there were mixed signals about
growth - I still feel there are. But my job is not to make predictions
about growth. My job is to implement policies that will have growth be
stronger," he said.
"We
feel that we may not be far away" from the target, but that depends on
the European Union's economic recovery in the second half, he said.
The minister noted over 90% of trade is with the EU, with increasing
trade with its Balkan neighbors.
Economists forecast a slowdown in 2005 GDP growth in Greece to between
2.5% and 2.7% this year, while the Greek central bank forecasts around
3.0% and the European Commission sees 2.9%.
Alogoskoufis also said the strong euro hasn't really harmed the
economy because most of its trade is within the eurozone.
"We
have no strong view on the value of the euro," he said. "And anyway,
there's very little that Greece can do to affect the value of the
euro. Let's be realistic about it," he said with a smile.
While the EUR11 billion price tag for the Olympics jump-started
growth, letting the Greek economy expand by the fastest pace in the
eurozone in 2003 and 2004, it also pushed the state's 2004 budget
deficit to over 6% of GDP.
Athens has raised sales taxes and promised to slash billions of euros
to bring the country closer to the 3% limit the EU imposes on
countries using the euro.
The
minister said this year the deficit will be cut to around 3.5% and
3.6% of GDP through expenditure cuts, a higher value-added tax and
sales of state assets.
Next year, he said the fiscal diet will consist mainly of reducing
outlays and better tax collection, but no tax increases are expected.
For 2006, the government estimates the fiscal deficit to be 2.8% of
GDP.
Alogoskoufis is in Japan to drum up Japanese investment and tourism
and to visit the Aichi World Exposition being held in Aichi
Prefecture, central Japan, for the Greek National Day.
-By
James Simms, Dow Jones Newswires; 813-5255-2929; james.simms@dowjones.com
-Edited by Kenneth McCallum [ 19-05-05 0609GMT ] |