investment were very close to their targets.
The results of the stabilization program had both negative and positive aspects. On the one hand, the austerity measures brought forth a recession. On the other hand, the current account deficit reduction met the targeted level of $1.25 billion. Additionally, the PSBR and the inflation rate were reduced, but failed to meet their ambitious targets of 9% and 10%, respectively. Moreover, the terms of trade during these two years improved owing to increased competitiveness of Greek products.
After a considerable decline, private investment increased during 1986-1987; however, total investment was below the previous period's level. Of course, weak investment delays modernization, and this, in turn, dampens productivity. However, as a result of renewed business confidence in PASOK, especially the elimination of fears of nationalization, investment escalated in the following few years. (For examples of future large industrial investment projects, see Athena, November 1987.)
In particular, total fixed investment as a percentage of GDP averaged approximately 21.5%, the lowest rate since the 1950s. This chiefly reflects the declining share of private fixed investment. Further, even though economic growth was weak, the above statistic suggests that structural changes that occurred in the previous periods may have been temporarily reversed. Private consumption as a percentage of GDP was approximately 74% on average, a rate close to that of the previous period. On the other hand, public expenditures' average share of GDP was approximately 22%, a rate higher than at any other period, reflecting the contribution of PASOK's socialization policies to the escalating PSBR.
Income distribution continued to shift toward wage income through 1985. However, the trend was modestly reversed by the austerity measures considered necessary by the World Bank, OECD, and EEC authorities. These measures, along with increased unemployment and declining real wages, severely damaged PASOK's relationship with labor as mentioned by Petras ( 1987). This, as well as the alleged financial scandals of PASOK, certainly contributed to the re-election