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Friday, 17 October 2008

Signs and actions across Europe

A story in Kathimerini tells of how things may be in the economy. Friends and acquaintances had told us over September that it had been a slow year on the island; that Ipsos was 'dead'; it was proving difficult to move house; they were getting cancellations - less from visitors, more from Corfiot customers looking for ways to tighten purses; air fares are dearer; expected bookings aren't being made; cash flows are slowing.
...Greece, an oil-importing nation, stands to benefit from the sharp drop in world oil prices and other commodities, as the global financial crisis gets deeper. So far, the country has also benefited from its closer economic ties with neighboring emerging markets which continue to expand quickly. “Greece is lucky because it does not have developed financial markets,” said the general director of a private equity fund. Moreover, the Greek economy does not depend so much on financial markets. Studies show that more than 70 percent of the wealth of the average household is tied up in real estate and not in stocks, bonds and other financial instruments traded on the local and world markets. Despite a drop in turnover, lower home prices and an oversupply of new houses, the Greek real estate has not suffered the kind of recession seen in the USA, the UK, Ireland and Spain. In other words, so far so good. Unfortunately, the country has yet to experience the full headwinds of the fast economic slowdown in its major eurozone partners and the consequences of a much tighter credit policy adopted by a growing number of local banks. History teaches us that it takes some time for a recession or substantial economic slowdown to show its effects on Greek shores and such will be the case this time around. So, slower merchandise export growth at best and a stagnation in tourist revenues should be expected next year, hitting the relevant local industries...

'So what's new?' I hear our friends observing. The down turn was not unforeseen. People are economically literate, informed about the state of the world.

In line with other EU finance ministers, George Alogoskoufis has proffered €28 billion to national banks - part of €1.7 trillion Europe-wide rescue package.

ana-digest - Friday 17/10/08 vol 01, 3167: ...measures are compatible with actions agreed during an ECOFIN meeting and an special Eurozone summit last week. The Greek minister reiterated the government's political commitment to protecting all bank saving deposits and noted that the package of measures would not put a burden on the country's fiscal condition...

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