|The government has succeeded in reducing budget deficits and inflation,
two key factors that allowed Greece to join the Economic and Monetary
Union (EMU) on January 1, 2001. On January 1, 2002, Greece, along with 11
out of its 14 EU partners, adopted the euro as its new common currency.
The euro is expected to boost trade, help dismantle the last remaining
market barriers within the EU, and stimulate production.
The Greek economy is expected to grow 3.5% in 2002 and continue at robust rates above projected EU averages. Years of austerity and reform programs, however, have increased unemployment in some sectors. Foreign investment has also dropped and efforts to revive it have been only partially successful. Greece's large general government debt is projected to drop to 99% of GDP ($135 billion euros) in 2002. Many structural problems persist and privatization of the telecommunications, banking, aerospace, and energy sectors has not moved at the pace originally proposed.
Services make up the largest and fastest-growing sector of the Greek economy. Tourism is a major source of foreign exchange earnings, although the industry has been slow to expand and suffers from poor infrastructure. About 12 million tourists visited Greece in 2001 with net revenues exceeding five billion euros. Industrial activity posted increases for the seventh year in a row, rising by 6.1% in 2000. Greece's food industry is expanding rapidly to support new markets in neighboring countries. High-technology equipment production, especially for telecommunications, is also a fast-growing sector. Agriculture employs about 15% of the work force and is still characterized by small farms and low capital investment, despite significant support from the EU in structural funds and subsidies. Traditionally, a seafaring nation, the Greek merchant fleet totaled 5,101 ships in 2000, with 1850 registered under the Greek flag.
Greece has been a net beneficiary of the EU budget; in 2001 EU transfers accounted for 3.4% of GDP. From 1994-99, about $20 billion in EU structural funds were spent on projects to modernize and develop Greece's transportation network in time for the Olympics in 2004. The centerpiece was the construction of the new international airport near Athens, which opened in March 2001 soon after the launch of the new Athens subway system.
EU transfers to Greece are to phase out over the next decade, when the
last of some $24 billion in structural funds are disbursed by 2006. These
funds contribute significantly to Greece's current accounts balance and
further reduce the state budget deficit. In addition, EU funds will
continue to finance major public works and economic development projects,
upgrade competitiveness and human resources, improve living conditions,
and address disparities between poorer and more developed regions of the
purchasing power parity - $181.9 billion (2000 est.)
SOURCES: The World Factbook, U.S. Department of State
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