UPDATE: Greek Unionists Protest 2009 Budget Ahead Of Vote
Friday December 19th, 2008 / 17h06
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ATHENS -(Dow Jones)- A small group of union workers staged a peaceful protest Friday outside the Greek parliament demanding that the government withdraw its 2009 budget and criticizing the ruling party's neoliberal policies.
"The international economic crisis is upon us and it cannot be confronted unless we overturn the antisocial policies of this government," Yannis Panagopoulos, president of the private-sector umbrella union, GSEE, told the rally of about 300 demonstrators.
Parliament is currently debating next year's budget which is expected to be voted on this Sunday at midnight. It is expected to pass along party lines with the pro-business New Democracy government controlling 151 seats in the 300 member chamber.
The protest, although small, reflects a deeper unease in Greece about the economic prospects for the country, which grew at a 3.1% rate in the third quarter, amid expectations of sharply lower growth next year.
A poll released by the European Commission this week showed that 90% of Greeks thought that the state of the Greek economy was bad, and 69% that the country was heading in the wrong direction economically.
Analysts have also linked the recent student unrest that followed the police shooting of a 15-year-old boy two weeks ago to a broader unease among young people about their economic prospects.
According to the 2009 budget, the Greek government expects the economy to grow at a 2.7% rate next year, slightly above the European Commission's forecast of 2.5%.
However, a recent report by Citibank holds a bleaker view for the economy. Citibank forecasts that Greek economic growth will tumble to just 0.5% next year and lead to a sharp widening in the budget deficit.
"With a likely substantial slowdown in GDP growth from around 3.1% in 2008 to around 0.5% in 2009, we expect the general government deficit ratio to increase from about 3.2% of GDP in 2008 to about 4.5% in 2009," the report said.
The report also predicts that Greece's overall indebtedness will increase, predicting that the general government debt ratio will rise to 100.3% of GDP in 2008 and 104.5% of GDP in 2009 from 94.8% of GDP in 2007.
Combined with the recent student unrest, foreign investors have become increasingly concerned about Greece's ability to finance its huge national debt and have shunned Greek government bonds.
As a result, the spread between 10-year Greek bonds and their German counterparts - a perceived measure of risk - has risen to around 225 basis points as of late Friday, compared with about 204 basis points one week earlier.
-By Alkman Granitsas, Dow Jones Newswires; +30 210 331 2881; alkman.granitsas@dowjones.com
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