Greek recession appears to be slowing

Better-than-expected Q2 figures indicate gradual deceleration of economy’s plunge

Greece outperformed fiscal targets agreed with the EU and International Monetary Fund for the first seven months, reporting a €2.6 billion primary surplus for the central government against a target of a €3.1 billion deficit. Photograph: Angelos Tzortzinis/Bloomberg

Greece outperformed fiscal targets agreed with the EU and International Monetary Fund for the first seven months, reporting a €2.6 billion primary surplus for the central government against a target of a €3.1 billion deficit. Photograph: Angelos Tzortzinis/Bloomberg

Tue, Aug 13, 2013, 01:00

Greece’s economy shrank by 4.6 per cent on an annual basis in the second quarter, marking a gradual deceleration of the country’s longest recorded recession, according to figures published yesterday by Elstat, the independent statistical agency.

The figures were marginally better than expected, raising hopes the full-year contraction would come in at 4.2-4.5 per cent, according to Athens-based economists.

However, the figures were not seasonally adjusted because of a shortage of data together with changes in indicators used for the calculation, according to Elstat, while quarter-on-quarter output figures were not published.

The second-quarter contraction, following one of 5.6 per cent in the first quarter on an annual basis, was the lowest since 2011 but it remained unclear whether the economy is finally stabilising after a six-year decline.

‘Reaching bottom’
“The latest output figures are another indication that we are reaching bottom but we can’t say exactly when it will happen,” said Miranda Xafa, chief executive of EF Consulting in Athens. “It’s hard to tell without having quarter-on-quarter figures . . . There are mixed signals,” said a private-sector analyst who declined to be identified.

“The business confidence index has declined in the past two months, yet the PMI [purchasing managers’ index] is up.

“The best you can say is that we should see positive quarter-on-quarter growth in the third quarter because of a rebound in foreign tourist numbers in the high season,” the analyst added.

Deputy finance minister Christos Staikouras announcing seven-month budget execution figures yesterday, sounded optimistic that Greece was on track for a primary budget surplus, excluding interest payments on debt, this year.

Achieving a primary surplus in 2013 would open the way for Greece to seek further debt relief from its euro zone partners and would bring a sustained recovery closer.

‘Business confidence’
“The latest figures confirm an improving fiscal trend that brings a surplus closer . . . and helps rebuild consumer and business confidence,” Mr Staikouras said.

Greece outperformed fiscal targets agreed with the EU and International Monetary Fund for the first seven months, reporting a €2.6 billion primary surplus for the central government against a target of a €3.1 billion deficit. The surplus resulted mainly from higher-than-projected inflows of EU structural aid, lower outlays on public investment projects and a one-off €1.5 billion payment from euro zone central banks out of profits made on Greek government bonds.

Tax revenues were lagging €1.5 billion behind the interim target, prompting concern over further delays in payment of income and property taxes by cash-strapped companies and households. – (Copyright The Financial Times Limited 2013)