Stoil Topalov

            The Dow Jones rose above 8,000 points for the first time since the end of January, closing the week at 8017.5, or a 5.8% gain. In London, the FTSE 100 closed at 4029 points, up 4.9% this week. The Nikkei closed 1.2% higher this week, at 8749 points. The general index of the Athens stock exchange also rose, and closed Friday at 1754.6 points, registering a 5.3% rise for the week.

            March was a good month for world markets, with the FTSE 100 gaining 11%, the Dow Jones gaining almost 20%, and the Athens stock exchange also gaining around 15%. Positive steps towards recovery from the world crisis were also taken at the G20 meeting in London this week, with the leaders of the world’s 20 largest economies agreeing to spend $1 trillion on tackling the worldwide slump, as well as increase the budget of the IMF to almost triple the current levels. This will be of direct help to countries of Central and Eastern Europe like Hungary and Romania, who are already recipients of aid from the Fund, as the economic crisis has taken a toll on their currencies. The positive expectations from the summit helped markets continue their gains despite bad unemployment news from the Unites States, where the unemployment rate reached 8.5% for the first time in over 20 years.

            In Greece, all eyes are on the finance minister as he is expected to announce the steps needed to be taken to reduce the budget deficit as recommended by the European Commission (EC). The Commission is due to review a report in June, outlining the measures taken by the Greek government since it was put on the EC’s watch-list almost two weeks ago. Just this week it was announced that the budget deficit for 2008 was even greater than expected - and will be reported at around 4.4% and not 3.7% as was the earlier estimation. One of the recommendations of the EC was tighter control of the public sector, and the finance ministry has announced the creation of an authority to monitor the salaries of the public sector. The aim is to get the budget deficit under 3% by the end of 2010.

            Finding the finances to cut the deficit, however will be hard, even more so since the government also announced a plan for a 50% reduction in automobile registration taxes - which applies to motorcycles, small trucks (under 3.5 tonnes) and cars, and will affect new and imported cars. This new reduction will apply from Monday, 6th April 2009.

            In general, the news from this week is much the same as has been for most of March - improvement in global stock markets giving optimism to investors, however that does little to fix the real economy, with budget deficits soaring, recession having spread to most of the world’s leading economies, and unemployment rates showing no signs of improvement.