Greek economy fell more than forecast

GREECE’S ECONOMY, reeling from austerity measures demanded by creditors in exchange for rescue funds, contracted almost a percentage point more last year than the government forecast.

Gross domestic product fell 7 per cent from a year earlier in the fourth quarter after contracting a revised 5 per cent on an annual basis in the previous three months, the Athens-based Hellenic Statistical Authority said yesterday.

GDP declined 6.8 per cent in 2011, according to Bloomberg calculations, compared with a 6 per cent contraction estimated in the government’s 2012 budget.

“Recessionary pressures have intensified as the impact from additional austerity measures have been amplified by high uncertainty about the prospects of the country,” said Nicholas Magginas, an economist at National Bank of Greece.

Greece is now in its fifth year of recession.

Prime minister Lucas Papademos’s government on Monday passed through parliament a new package of austerity measures demanded by troika of the European Commission, International Monetary Fund and European Central Bank in exchange for a €130 billion rescue.

The troika demanded deeper spending cuts from Greece when drafting the conditions for its new rescue package to take into account that GDP would contract more than previous forecasts.

Critics say the measures will deepen the recession. The EU and IMF’s latest draft report on Greece indicates that the economy will contract more in 2012 than the 3 per cent the IMF forecast in a December report.

The unemployment rate in November rose to 20.9 per cent, a record high.

“The situation in the Greek economy has deteriorated,” said Christos Staikouras, a spokesman on economic issues for New Democracy, the second-biggest parliamentary party.

“Each official announcement confirms that the intensity and scope of the recession is unprecedented.”

The fourth-quarter preliminary figure is based on available non-seasonally adjusted data, the statistics authority said.

GDP declined a revised 8 per cent in the three months through March and 7.3 per cent in the second quarter, the agency said. It did not provide seasonally adjusted figures. – (Bloomberg)