The government has succeeded in reducing budget deficits and inflation, two key factors that allowed Greece to join the Economic and Monetary Union (EMU) on January 1, 2001. Greece, along with 11 out of its 14 EU partners, adopted the euro as its new common currency in January 2002. The euro is expected to boost trade, help dismantle the last remaining market barriers within the EU, and stimulate production.

The Greek economy is expected to grow by 4% in 2003 and by 4.2% in 2004, the year that Athens will host the 2004 Olympics. Years of austerity and reform programs, however, have kept unemployment steady in some sectors. Foreign investment also has dropped, and efforts to revive it have been only partially successful. Greece's large general government debt is estimated to drop to 98.5% of GDP (162 billion euros) in 2004, a slower progress than projected in the past.

Services make up the largest and fastest-growing sector of the Greek economy. About 12 million tourists visited Greece in 2002 with net revenues at about 7.7 five billion euros. Industrial activity continues to post dramatic increases while Greece's food industry and high-tech/telecommunications remain fast-growing sectors. Agriculture employs about 12% of the work force and is still characterized by small farms and low capital investment, despite significant support from the EU in structural funds and subsidies. Traditionally a seafaring nation, the Greek-owned merchant fleet totaled 3,355 ships in May 2003, 9.3% of world merchant fleet and 18.3% of gross tonnage.

European Union (EU) Membership
Greece has realigned its economy as part of an extended transition to full EU membership that began in 1981. Greece assumed the rotating EU presidency in the first half of 2003. Greek businesses continue to adjust to competition from EU firms, and the government has had to liberalize its economic and commercial regulations and practices. Greece has been granted waivers from certain aspects of the EU's 1992 single-market program.

Greece has been a net beneficiary of the EU budget; in 2003 EU transfers accounted for 2.8% of GDP. From 1994-99, about $20 billion in EU structural funds were spent on projects to modernize and develop Greece's transportation network in time for the Olympics in 2004. The centerpiece was the construction of the new international airport near Athens, which opened in March 2001 soon after the launch of the new Athens subway system.

EU transfers to Greece, under the third Community Support Framework Program, are to phase out over the next decade, when the last of some $24 billion in structural funds are disbursed by 2006. These funds contribute significantly to Greece's current accounts balance and further reduce the state budget deficit. EU funds will continue to finance major public works and economic development projects, upgrade competitiveness and human resources, improve living conditions, and address disparities between poorer and more developed regions of the country. A new support program may be implemented in the future.

U.S.-Greece Trade
In 2002, the U.S. trade surplus with Greece was about $605 million. Although there are no significant non-tariff barriers to American exports, the United States accounted for only 3.7% of Greece's imports in 2002, which totaled about $31 billion. The top U.S. exports remain defense and related contracts, although American business activity is expected to grow in the tourism development, medical, construction, food processing, and packaging and franchising sectors. U.S. companies are involved in Greece's ongoing privatization efforts; further deregulation of Greece's energy sector and the country's central location as a transportation hub for Europe may offer additional opportunities in electricity, gas, refinery, and related sectors.