The effort for the transformation of Greece into a more dynamic, open and competitive economy, friendly to investment and entrepreneurship, is yielding results: a tenfold increase of foreign investment over the previous year, which reached 4 billion euros from January to November 2006.

International surveys forecast that, in the next four years, direct foreign investment shall increase by 50 percent, reaching 2.4 billion euros, compared to the 1.6 billion estimate for 2006 (*1).

The improvement of the competitiveness of the Greek economy is reflected in the increasing interest of foreign companies, for example in mining, energy, real estate and services, such as tourism, where development marks double digit increase rates.

Also, Greece is considered by many as a good entry gate for investors and businessmen to Southeastern Europe, since it is the most important financial and business center in a region with remarkable potential.

Through Greece, investors and businessmen have access to the services of 3,600 Greek companies operating in the Balkans and the Eastern Mediterranean, as well as to a network of one thousand Greek banking offices beyond Greece’s borders.

Furthermore, the Greek ports are strategically located as entry points in the area.

Because of the increase in competitiveness (*2), exports and tourism are rising faster than nominal GDP. Exports rose by 13.1percent in 2005 as compared to the year before and by 19.4 percent between January and October 2006, compared to the same period in 2005. Consequently, growth reached 4.2 percent in the first three quarters of 2006, versus 3.7 percent in 2005 and unemployment rates fell accordingly.

Furthermore, the ongoing, comprehensive effort brought down the budget deficit by 5.3 percent of real GDP: 2.5 percent in 2006 against 7.8 percent in 2004. A figure of 2.4 percent is expected for this year, well below the 3 percent European Union guideline.

Investment is stimulated by the gradual reduction of corporate tax rates from 35 percent in 2004 to 25 percent in 2007 as well as by a more effective legal framework (new investment law), whereas the ongoing tax reform is also including wider tax margin and reducing personal income tax rates.

Also, by a comprehensive privatization agenda which includes public real estate, infrastructure, the banking sector, the state telephone company etc.

The Greek government also plans to allocate funds amounting to 20.1 billion euros from the fourth European Community Support Framework, among other priorities, to further improve infrastructure and the skills of the labor force.

In the energy sector, there is an ongoing effort to liberalize Greece’s electricity and natural gas market, offering excellent opportunities for large-scale private investment and to increase the share of natural gas and renewable energy sources, such as solar and aeolic energy.

Also, to optimize emissions, as stipulated by the Kyoto Protocol. The goals are, that by 2010:

* One million households will be supplied with natural gas

* Three new electric power units will come into operation and

* A total of 3,000MW of renewable energy sources systems will be added to the energy market.

On a regional level, and more specifically on the energy sector:

* 2007 saw the completion of the Greek Turkish natural gas pipeline. This will be complemented by the Greek-Italian pipeline, by which natural gas from the Caspian and the Middle East will be transferred to the high consumption energy centers of Western Europe.

* Greece’s natural gas grid will also be interconnected with those of its northern neighbors.

* A few days ago, in Athens, the agreement between Greece, Russia and Bulgaria was signed for the construction of the Burgas-Alexandroupolis oil pipeline which will transfer oil from the Black Sea to the Mediterranean and the western markets, bypassing the Bosphorus straights.

* The upcoming construction of the power interconnection with Turkey, via the 400KV Filippi-Nea Santa-Babaeski line, with which the Mediterranean Electricity Ring will be completed, as well as other similar interconnections through the northern border of Greece, will increase power trading in the region.

All these links will bring closer the countries of the European Union, the Black Sea and of Southeast Europe, a constant endeavor of Greece, a country at the crossroads between East and West.

*1. The Economist Intelligence Unit.

*2. The Institute for Management Development, Switzerland.

For more information on the Greek Economy please contact Embassy of Greece: Greek Economic & Commercial Office in Jeddah, KSA: Tel: 02 6690824, Fax: 02 6692644, e-mail: [email protected]