European Commission: Greece shifts from consumption to investments

The EC report on the competitiveness of the Greek industry and businesses records a turn of the Greek economy toward the field of investments and exports rather than consumption.

The economic model that dominates in Greece the last three years emphasizes the promotion of exports and mainly private investments, while domestic demand flattens as the deep recession and high unemployment make consumers tightening their expenditures.

What remains to be seen is whether this model is sustainable on a long term, or if it will drive the Greek economy into a new dead-end, as domestic consumption feeds largely on economic activity and it is not certain whether it can be replaced by an increase in exports, the growth of which has slowed down, while if we were to exclude the oil products, it would display a negative rate.

In its report, the European Commission argues that the memorandum sought to correct imbalances in the economy and that exports have already risen over the past few years, but due to the recession and the few loans given by Greek banks, investments are still much lower than expected.

The EC adds that the regulatory environment was a drag on business and entrepreneurship, and this fact, coupled with the lack of competition has resulted in low productivity and competitiveness. It also says that further important steps have been taken to facilitate the creation of businesses and simplify the procedures for licensing and approving of investments.

The EC notes that the difficult economic conditions, the continuing uncertainty, and mainly the reduction in loan supplies continue to hinder the entrepreneurial activity, especially for SMEs (Small and Medium Enterprises), and stresses that the Greek economic reform must remain a priority in order to implement the much needed changes.