Greek current account gap shrinks - only one new Ferrari
By Harry Papachristou
ATHENS (Reuters) - Greece's current account deficit narrowed last year to its lowest level since the country joined the euro, adding to evidence that the economy is slowly responding to harsh austerity measures.
The gap narrowed by 73 percent in 2012 to 5.58 billion euros ($7.45 billion), helped by falling imports and lower interest payments after a sovereign debt cut, the country's central bank said on Tuesday.
The bank gave no breakdown on the extent to which import cuts reflected less purchases of machinery by Greek firms, a bad sign for crumbling investment levels and chances of a much needed revival in exports such machines could produce.
However, one telltale statistic showed how showy lifestyles are out of fashion in bailed-out Greece. Only one new Ferrari sports car was registered nationally in the whole of 2012. That, plus one used Ferrari sold, contrasted with 21 new and 37 used ones in 2007, the last year before Greece's recession started.
The current account deficit shrank to 2.9 percent of gross domestic product (GDP) in 2012 from 9.9 percent the previous year - its lowest level since at least 1999, according to available data.
"The pace of the adjustment was impressive last year," said Nikos Magginas, an economist at the country's biggest lender National Bank.
The current account balance is a key measure of how competitive a nation's economy is and of whether it is living within its means. The reading had deteriorated during a debt-fuelled economic boom to a record deficit of 14.7 percent of GDP in 2008.
But a severe economic contraction, partly due to austerity measures as part of the country's international bailout, has narrowed the gap and may eliminate it in 2014, according to government estimates. Continued...