02/09/2005 08:37
The sharp increase in the price of crude oil at $70 per barrel has led to the downward revision of the official forecasts for the future growth rate and inflation. The vast majority of analysts that participated in a Stockwatch survey believe that the forecasts are optimistic, while the Finance Ministry talks about a lower growth and slightly higher inflation.
The Ministry anticipated that the growth rate would accelerate to 4.4% in 2006 against 4% this year. The Finance Ministry technocrats expected that inflation would drop to 2.2% in 2006 against 2.5% in 2005 and the deficit would go down to 1.7% of GDP against 2.9% in 2005.
Almost all analysts believe that the Finance Ministry’s technocrats are optimistic. All but one expect that the rate will be slower and inflation will be higher than the anticipated. Eight of eleven analysts believe that the fiscal deficit will be larger than 1.7% of GDP.
The Ministry based its forecasts on estimates that the average price of oil would stand at $55 and $60 per barrel in 2006. The sharp increase in the price of oil at $70 in the past few weeks has reversed the acknowledgments on which the budget for 2006 was based.
“We have recently tried to analyze the impacts from the further increase in the price of oil. We are convinced that our forecasts for 2005 are realistic. However, for 2006 we might end up with the conclusion that growth will be slightly lower, probably at 4%”, Head of EU Economic Study Department, Andreas Charalambous told StockWatch. As for inflation, the Finance Ministry anticipates that it will be probably slightly higher in 2006.
“We are committed to our target for a deficit at 1.7%. We have invested in our reliability in the past few years and we must keep our commitments to the EU”, Mr. Charalambous concluded.
The Ministry anticipated that the growth rate would accelerate to 4.4% in 2006 against 4% this year. The Finance Ministry technocrats expected that inflation would drop to 2.2% in 2006 against 2.5% in 2005 and the deficit would go down to 1.7% of GDP against 2.9% in 2005.
Almost all analysts believe that the Finance Ministry’s technocrats are optimistic. All but one expect that the rate will be slower and inflation will be higher than the anticipated. Eight of eleven analysts believe that the fiscal deficit will be larger than 1.7% of GDP.
The Ministry based its forecasts on estimates that the average price of oil would stand at $55 and $60 per barrel in 2006. The sharp increase in the price of oil at $70 in the past few weeks has reversed the acknowledgments on which the budget for 2006 was based.
“We have recently tried to analyze the impacts from the further increase in the price of oil. We are convinced that our forecasts for 2005 are realistic. However, for 2006 we might end up with the conclusion that growth will be slightly lower, probably at 4%”, Head of EU Economic Study Department, Andreas Charalambous told StockWatch. As for inflation, the Finance Ministry anticipates that it will be probably slightly higher in 2006.
“We are committed to our target for a deficit at 1.7%. We have invested in our reliability in the past few years and we must keep our commitments to the EU”, Mr. Charalambous concluded.
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