Stoil Topalov

This week the International Monetary Fund and Eurostat gave bad news for the Greek economy. A report of the IMF predicted a fall of the GDP with 0.2% for 2009 and 0.6% for 2010 and Eurostat confirmed that the budget deficit reached 5% and the national debt reached 97.6% of the GDP.

Eurostat’s data placed Greece among the most problematic economies in the Eurozone. According to the statistical agency, Greece is second with national debt of 97.6%, after Italy, which had 105.8%. Greece’s budget deficit reached 5% of the GDP and Ireland’s is 7.1%. this the third time this year that the government increases the expectations for the budget deficit.

The government, and more specifically the Finance Minister Yoanis Papatanasiou admit that the Greek economy needs urgent reforms and immediate measures will be taken for improving the deficit. The most probably measures are increasing taxes. But bad news do not stop here. Construction and tourism – the spines of the Greek economy – registered a fall of about 20% since last year. The industrial production also registered a fall of 7.8% since last year and the commercial sector reported a drop in sale-trade of 10.8%. Unemployment in Greece is also increasing and it reached 10%.

All this affected the Athens stock exchange very bad. The general index could not overcome the losses from Tuesday, when the index closed with a drop of 4.6% and this way, for the whole week the index closed with a drop for the first time since the end of February, when it closed with 1926.54 points.

Stock exchanges around the world also closed with low numbers, in comparison to the previous weeks. In New York, Dow Jones registered a growth of 0.3% because the investors have some doubts about an upcoming “stress test,” which is planned by the Federal Reserve for some of the biggest state banks and for the other half of the companies, which will announce their results next week. Unemployment data is also expected, for the GDP for the first three months of 2009 and for the real estate prices. This week, the London FTSE 100 registered a growth of 1.6% and in Tokyo, the Nikkei reported a drop of 2%.

As a whole, it became clear that problems for Greece are just starting. Summer – a season, which always manages to “wake up” the Greek economy with its tourists – is expected to discourage Greek citizens even more. In order to successfully deal with the deficit and the debt, the government will probably transfer the weight to tax players.