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Greece economy shrinks 5%

15 November 2011 14:53 (UTC +04:00)

Baku - APA-Economics. Greece’s economy slowed its steep slide in the third quarter but still shrank 5.2 per cent from a year earlier as the debt-choked economy continued to plummet in a recession that looks set to head into a fifth year, APA reports citing AFP.

The drop was mainly the result of huge wage and pension cuts, job losses, and tax hikes imposed under an international bailout aimed at stabilising Greece’s crumbling public finances and saving the country from bankruptcy.

The measures have pared down the size of bloated public sector costs that have driven public debt to more than 160 per cent of annual output, pushed unemployment to a record 18.4 per cent and hammered wages, crushing domestic demand. The third quarter figures, which included downward revisions to data from the first half of the year, did nothing to contradict forecasts that the Mediterranean state will enter a fifth year of recession in 2012.

Greece and its international lenders expect an economic contraction of 5.5 per cent in 2011, but that number is based on seasonally adjusted data that does not compare with Tuesday’s unadjusted results.

"A significant improvement appears unlikely in the fourth quarter given the deteriorating conditions in main trading-partner economies, weak domestic sentiment and new austerity measures that have been in effect since September," said Plato Monokroussos, an economist at EFG Eurobank.

"The lack of seasonally adjusted data has complicated the derivation of full year forecasts, but it appears that the pace of real GDP contraction in 2011 should be around -5.5 as forecast."

The data came alongside reporting from the rest of the 17-nation euro zone, which grew by 0.2 per cent when compared with the previous three months.