Imminent deregulation of telecoms and energy, in line with EU directives, has given an unprecedented boost to business confidence. Greece s information technology sector appears poised for explosive growth, while traditional sectors such as tourism and ocean-going shipping are flourishing. But there are concerns that the finance ministry may have trouble restraining inflation as the economy picks up speed without being able to use the familiar tools of interest rate intervention and exchange rate policy. Fiscal and wage policies are already under pressure. The governing Socialist party faces demands from the public sector unions to relax wage policy now that Greece has achieved entry to the euro-zone.
Fiscal policy is also under pressure because the government is already committed to lowering taxes.
In the banking sector, entry to the euro provides a host of new opportunities, but competition will be fierce. Greek banks are looking to develop asset management, private banking and bancassurance through strategic alliances with foreign partners. Greek mutual funds controlled just Dr11,500bn at the end of the first half. Inflows showed only a marginal increase, with many investors switching funds to repos as share prices on the Athens stock exchange declined. Bancassurance products are limited and cross-selling of financial products is at an early stage.