Greek economic slump deepens in third quarter
Greece’s economic slump deepened in the third quarter, with output shrinking 7.2 per cent on an annual basis as the debt-racked country heads into its sixth year of depression.
The contraction was deeper than the second quarter’s 6.3 per cent drop and follows the passage of a tough 2013 Budget by Prime Minister Antonis Samaras’s Government that is expected to continue to smother growth for most of next year.
Since 2009, the Mediterranean state’s economic decline – which Samaras has dubbed Greece’s “Great Depression” – has wiped a fifth off economic output and put one in four Greeks out of work.
Analysts said the reading could point to an even grimmer outlook because it was offset by better-than-expected returns from the country’s vital tourism sector.
“I think the recession will continue to deepen until the first half of 2013, due to the implementation of all the cuts,” said Xenophon Damalas, head of investment services at Marfin Egnatia bank in Athens.
“If we hadn’t had such a good picture in tourism this year, the recession would have been deeper.”
In its mid-term fiscal plan, the Government expects the economy to shrink 6.5 per cent in all of 2012 and 4.5 per cent next year. It forecasts a slight recovery to begin at the end of 2013 and growth of 0.2 per cent in 2014.
Greece’s prolonged slide has undermined Athens’s ability to hit targets laid out in its bailout programme by undercutting budget revenues and feeding popular anger over belt-tightening.
The country of 11 million is awaiting the release of more than €30 billion in aid from its international lenders to pay off debt and shore up its banking sector.
But a public clash on Tuesday between the lenders over how Athens can bring its debts down to a sustainable level reignited fears that its and Europe’s broader debt troubles could flare up anew.
Conditions could worsen under the 2013 Budget, which includes more than €9 billion in new tax hikes and spending cuts, the latter of which will fall most heavily on pensioners and public sector workers.