Brussels, 13/06/2014 (Agence Europe) - In a report published on Friday 13 June, DG Economic and Financial Affairs at the European Commission says that making Greek institutions more efficient and more in line with the EU and OECD average could reduce the country's competitiveness gap by between 54% and 78%.
The document says: “Greece's export performance is dramatically lagging behind. (…) And it has been exacerbated during the crisis, with Greek export performance deteriorating significantly and lagging behind the recovery in other programme countries. At the same time, Greece's export potential could be enormous. Greece controls 16% of international shipping, making it the world's largest shipping nation. It is located along one of the world's busiest international shipping lanes - the Suez Canal and the Mediterranean - and at the crossroad between three continents. This makes it a natural gateway for trade between Asia and Central Europe”.
The IMF made similar comments in a monitoring report published on 10 June, noting that exports have failed to become a strong driver for growth. The latest Elstat figures show a significant slowdown in April.
The worst affected areas include electrical equipment and machinery while transport, tourism and agriculture perform relatively favourably. The report says that this begs a question that the Greek government must find an answer to: “Should Greece focus efforts on nurturing and expanding its current competitive advantage, or should it focus efforts on laggards, thereby diversifying its economy and possibly benefiting from quick reform gains and 'low hanging fruits'?” The report says: “Much of the Greek export gap can be traced back to the Greek institutional deficits. These findings suggest that, while Greece has already achieved major improvements in cost competitiveness since the start of the Greek adjustment programme, structural reforms must also address non-cost competitiveness factors, such as the underlying institutional deficits, to unlock Greece's export growth potential”. The document states: “For policy action, it would be useful to identify more in depth exactly which specific institutions are essential for export growth. Finally, a key question is how quickly Greece can tackle its institutional deficits and how quickly reforms will translate into change on the ground”.
Withholding €1 billion of aid. There are some delays in implementing the May milestones in Greece, which are preconditions for the payment of a sub-batch of €1 billion of aid. Member states' experts on the Euro Working Group were therefore unable to give the nod on Friday to disbursement of the aid. The question may be discussed by Eurogroup ministers on 19 June and may also be discussed by experts later in the month. Greece says it hopes to be ready by the end of June so that €1 billion can be paid out in July, when another billion of aid is also due to be approved, but a eurozone source said a lot of work remained to be done still and there might be delays in implementing some of the prior actions for June. (EL)