Leader tipped to fall back in growth race

The Greek economy is expected to continue the outperformance of its EU partners that started in 1996, growing by about 4% in 2003 and 4.2% in 2004. By contrast, the European Commission (EC) forecasts GDP growth of 0.8% in 2003 and 2% in 2004 for the 15-member European Union as a whole and even lower rates of 0.4% and 1.8% for the eurozone.

There is, though, a downside to the Greek dynamism: its economy shows signs of fiscal slippage. This is causing concern about the country's public debt and growth prospects, bankers and economists say. And the government's strenuous efforts to redeploy privatization proceeds are meeting with mixed results.

Pillars of growth For now outperformance is based on the twin pillars of strong investment spending and healthy consumption growth. Backed by huge inflows from EU Structural Funds, preparations for the 2004 Olympic Games and the lowest interest...