BoG chief: Crisis as catalyst for Greece

The Greek economy has great growth potential and the present crisis could become a catalyst for a new course that could reform the economy, improving competitiveness and prosperity, Bank of Greece governor George Provopoulos said on Thursday.

In a prologue to a series of surveys covering the country’s current accounts balance, published by the central bank, Provopoulos said many of the policies needed to achieve a transformation of the Greek economy are included in the economic programme of the memorandum signed with the EU and the IMF in May. The central banker stressed that the programme offered a unique opportunity to set in motion positive and long-term sustainable growth dynamism.

The country current accounts deficit ranged between 0 and 5.0 pct of the Gross Domestic Product in the period from 1960 to 1990.

But from 200 onwards a dramatic worsening of the situation occurred with the deficit skyrocketing to 14 pct of GDP in 2008, reflecting competitiveness losses. Since the country’s entry in the eurozone, all competitive indexes have suffered a loss of 20-25 pct, the central banker said, adding that reforms in the labour and product markets were needed to change this situation.