Greece: economy to slow to 2.7 pct growth in 2009

Greece's economy will slow to a 2.7 percent growth rate next year as the global economic crisis takes its toll, the conservative government predicted on Friday.

Finance Minister George Alogoskoufis submitted the final 2009 budget to parliament with revised figures from the initial draft submitted in October, which had projected growth at 3 percent.

"(The revised figure) is a satisfactory rate given the current situation, and we will do what is necessary to try to achieve it," Alogoskoufis said. "You can't command growth rates, these are forecasts."

The budget forecast for growth in 2008 is 3.2 percent, down from 4 percent in 2007.

Alogoskoufis said the Greek economy had so far weathered the global crisis better than nearly all its euro zone partners.

"But it is clear that there are consequences and there may be more consequences in the future," he told a press conference, warning that the key sectors of tourism and shipping would suffer, as well as exports.

"If it hadn't been for the crisis we would have forecast growth of more than 4 percent," Alogoskoufis said.

Inflation is projected to drop slightly to 3 percent next year from the initial projection of 3.2 percent, while the budget deficit will increase slightly to 2 percent of gross domestic product from an initial projection of 1.8 percent.

For 2008, the budget forecasts a budget deficit of 2.5 percent and inflation of 4.3 percent.

Unemployment is expected to remain unchanged at 7.5 percent in 2009, compared to the 7.3 percent estimated previously in the draft budget.

"This will be a considerable achievement under the current circumstances," Alogoskoufis said.

The center-right government of Prime Minister Costas Karamanlis has made fiscal reform a centerpiece of its economic policy, reducing the budget deficit from a high of 7.4 percent of GDP in 2004. Greece had pledged to balance its budget by 2010.