ECONOMY

Greece has a mixed capitalist economy with the public sector comprising 60% of GDP, down from 70% in 1989. According to World Bank estimates, Greece's gross national product (GNP) in 1992--measured at average 1990-92 prices--was US $75,106m.

($7,180 per capita). Greece is a member of the European Union (EU) and the Organization for Economic Cooperation and Development (OECD). Her main economic partners are Germany, the United States, Italy, France, the Netherlands, and the United Kingdom.

In the agricultural sector, the country is self-sufficient except for meat, dairy products and animal foodstuffs. In 1992, agriculture, (including farming, forestry and fishing) contributed an estimated 14.9% of GDP and employed 21.1% of the labor force. The principal cash crops are fruit and vegetables (in 1992 they amounted to 12.7% of total export earnings), cereals and tobacco. During the period 1980-91 agricultural GDP rose by an annual average of 0.2%. Industry (including mining, manufacturing, power and construction) provided 26.1% of GDP, in 1991, and engaged 27.5% of the employed labor force. In the period 1980-1991 industrial GDP increased by an annual average of 1.2%. The remainder of the GDP is attributed to the Service sector.

Tourism has been a major source of income for Greece over the past three decades, with more tourists visiting the country each year. Greece's sunny climate, natural beauty, abundance of beautiful beaches, rich history and archaeological sites, combine with low prices and the continuous improvement of transport and accommodation facilities to make the country a favorite vacation spot among tourists. Whereas in 1968 one million tourists visited Greece, by 1991 that number had risen to an estimated 8.03m, and receipts from the tourist sector accounted to US $2,566m.

One of Greece's major economic problems is the structural public-sector deficit, which exists despite the implementation of various austerity measures in the late 1980s and early 1990s. Much of the country's large public-sector deficit can be attributed to the inefficiency of the public sector (Demosies Ypiresies) which continues to control about 60% of all economic activity, absorb over half of tax revenues and runs a costly social welfare system. A privatization program, launched by the New Democracy (ND) administration in the early 1990s, was expected to generate substantial revenues including about $1,500m. from the sale of the state telecommunications company (OTE). The privatization of OTE did not take place because the ND government lost its parliamentary majority in September 1993 and elections followed a month later. When PASOK was elected to power in October 1993, it proceeded with its own privatization program as well as a program of economic austerity eliciting the opposition of many trade unions.

Another major problem of the Greek economy is the existence of a para-economy. There is a vast parallel ?underground? economy in which tens of thousands of people are engaged. Income from these activities goes unreported and therefore it cannot be

taxed. Tax evasion is pervasive in regular economic activities as well. The government is introducing new measures to fight tax evasion with moderate results.

For some time Greece has been trying to attract foreign investment but with only modest success. Bureaucratic red tape does not facilitate the smooth operation of foreign companies in Greece. There is new legislation, however, aiming at minimizing red tape and providing additional incentives for foreign investment in the country.

In 1992 Greece received US $4,060m. of transferred funds (the equivalent to 5% of GDP) from the EU. In March 1993 the EU Council of Ministers approved a five-year plan, known as the Dellors Plan, in order to facilitate the adaptation of the Greek economy to the European economic and monetary union. This plan envisaged a reduction in the annual rate of inflation (to 4%) and in the public-sector deficit. In the period December 1993-November 1994, for the first time since 1977, inflation fell to a single digit number (9.5%).

Currency:  The unit is the drachma (Drachmi).  US$ 1 = 220.6 drachmas (June 5,1995).
National Product:       purchasing power equivalent  $93.2 billion (1993)
                        real growth                     1% (1993)
                        per capita                      $8,900 (1993)
Inflation Rate:  9.5% (Dec. 1993-Nov. 1994).
Unemployment Rate:  9.5% (1993).
Budget: Revenues:       $28.3 billion.
        Expenditures:   $37.6 billion, including capital expenditures of $5.2 billion (1994).

Exports:        $6 billion (f.o.b., 1992).
Imports:        $23.3 billion (c.i.f., 1992).
External Debt:  $23.1 billion (1992).
Industrial Production:  growth rate - 1.3% (1992); accounts for 20% of GDP.


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