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Last Updated: Friday, 16 May, 2003, 07:17 GMT 08:17 UK
Greeks still reeling from euro shock

By Richard Galpin
BBC Athens correspondent

The Greeks were amongst the most enthusiastic supporters of the euro when it replaced the drachma in January 2002.

Consumer boycott in Greece over price rises since euro introduction
Ordinary Greeks have been shocked by euro price hikes

The government and population were united in the belief that it would bring significant benefits to the country, both economic and political.

The big hope was that it would catapult Greece into the European mainstream.

Eighteen months later, opinion is much more divided.

Whilst the introduction of the euro went comparatively smoothly, ordinary Greek people have been shocked by the price-hikes which the new currency has brought in its wake.

Go to any street market in the capital, Athens, and the locals will tell you the cost of basic food such as fruit and vegetables has sky-rocketed.

The anger this has aroused led to a day of protest last September by millions of Greeks who boycotted shops and services.

"Some things have gone up by 200 or 300%," says Philippos Voulgaris, a self-employed decorator.

"Greeks still think in drachma, it was the best currency. And there's still a lot of confusion about the euro. People don't understand the value of the small coins in their pockets."

It has been a dramatic change. One euro would buy around 340 drachma.

Compared to two or three years ago, some things are almost twice as expensive, especially at restaurants or bars in Athens or on the islands
Tom, a Belgian tourist

People are used to dealing in hundreds, thousands and even millions of drachma.

One euro therefore seems a pitiful amount of money when in fact, given the low salaries in Greece, it is not something to throw away as small change.

The government has run a public information campaign to try to raise awareness about the true value of the euro.

But there is clearly more to do.


Businesses say this confusion amongst ordinary people has created the perception that prices have increased when in fact they have not.

This view is backed up by the broad inflation figures which do not show any marked increase.

But even government officials admit there has been a lot of rounding up of prices in some specific areas of the economy.

"Many prices have gone up," says Vassilis Rapanos, chairman of the Council of Economic Advisers, "particularly in the area of services such as cafes and hotels. And to a great extent this is because of the euro."

Tourism impact

There is a danger this could also have a negative impact on one of the country's biggest industries, tourism.

It is estimated ten million people visit Greece every year providing the most important source of foreign revenue.

But now there are rumbles of discontent amongst some holiday-makers.

"Compared to two or three years ago, some things are almost twice as expensive," says Tom, a Belgian tourist, "especially at restaurants or bars in Athens or on the islands.

"That's why I think more and more tourists prefer to go to other places in particular Turkey which also has a nice climate and a lot of things to see."

Vibrant economy

Despite these problems, the government remains convinced the euro has been responsible for transforming the Greek economy from one of Europe's weakest to one of the most vibrant.

Vassilis Rapanos, chairman of the Council of Economic Advisers, says the decision taken in the 1990s to work towards joining the euro-zone has forced radical reform of the economy in recent years.

"In the past the Greek economy suffered from high inflation, high deficits in the public sector and a large number of devaluations of its currency (the drachma)," he says, "So Greeks didn't really trust their currency."

He says the adoption of the euro has created an entirely new environment for consumers, investors and businessmen.

"Interest rates have been slashed very rapidly, the inflation rate is quite low now and the budget deficit has been reduced dramatically."

The government expects the Greek economy to grow faster than any other within the European Union this year.

'Euroflation' sparks Greek boycott
03 Sep 02  |  Business

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