ATHENS, Oct 8: Eurostat rejected most of Greece’s proposed 25 per cent upward revision of its national output, aimed at including parts of the large black economy in the euro zone’s second poorest member.
Greece, which was still on the EU’s list of budgetary offenders when it decided last year to revise its GDP figures for 2002-2006, its first revision in 12 years, said the European Union’s statistics agency approved about a third of the review.
This will mean some of Greece’s key economic ratios, such as the budget deficit and debt-to-GDP, which are under EU scrutiny, would not automatically improve as dramatically.
“The rise in the GDP with 2000 as a base year amounted to 9.6 per cent,” the country’s statistics service (NSS) said on Monday.
A Finance Ministry official said Eurostat rejected part of the methodology used and felt the construction sector should have a smaller effect. NSS said there was also an issue over the depreciation of public infrastructure.
Analysts said there was a silver lining, as Athens would not be burdened with huge financial obligations to the EU as a richer member.
“It’s a mixed blessing,” said EFG Eurobank economist Platon Monokroussos. “This is not likely to affect Greece’s credit rating outlook in any meaningful way since rating agencies are primarily concerned with the dynamics of such ratios as public debt to GDP.”
BLACK ECONOMY: Greece, rated A1 by Moody’s and A by both Fitch and Standard & Poors, had sought to restate its GDP to include parts of the black economy, estimated by economists at around 30 per cent of the country’s 210 billion euro output.
The restatement was mostly the result of incorporating into the national accounts estimates of the size of those areas of the economy on which little or no tax is paid. No additional tax revenue will result.
About one per cent of the revision came from the proceeds of unwanted activities, including money-laundering.
The 25.7 per cent revision would have shaved off half a percentage point from Greece’s 2.5 per cent of GDP budget deficit in 2007, while debt would have come down to about 80 per cent from about 100 this year.
Economists estimate the approved review will mean the debt mountain, the euro zone’s second biggest after Italy’s, would now stand at about 90 per cent of GDP while it might shrink the budget deficit by 10-20 basis points.
“It is a good result,” EU monetary affairs commissioner Joaquin Almunia said when asked about Eurostat’s decision during a euro zone finance ministers meeting in Luxemberg.—Reuters
