World Economy

Greece in Recession Last Year, Eyes Recovery

Economic recovery will be key to bringing down the jobless rate of 21%.Economic recovery will be key to bringing down the jobless rate of 21%.

Greece’s economy fell into recession again last year, confounding its international creditors who had predicted some growth after years of budget austerity.

The economy contracted by 0.2% in 2016, statistics service ELSTAT said on Tuesday, releasing its revised estimate of full-year gross domestic product, Reuters reported.

ELSTAT’s estimate, based on seasonally unadjusted data was based on lower than previously estimated household consumption.

It said gross domestic product in volume terms and measured at constant prices was €175.9 billion ($206.5 billion) last year, down from €178.1 billion in 2015. Final consumption dropped by an annual 0.3%, versus a 0.6% rise estimated by the agency in March.

“It’s a small change that has minor impact on other indices and on fiscal figures. It is a slightly weaker depiction of the real economy in 2016 due to the downwardly revised consumption expenditure,” said National Bank economist Nikos Magginas.

He said that the registered trend in consumption would also be a challenge for 2017.

Years of austerity imposed by the International Monetary Fund and European Union in exchange for bailouts have made many Greeks far poorer and shrunk consumption accordingly.

The European Commission, in its winter forecast published in February, projected GDP growth of 0.3% in 2016 while the International Monetary Fund’s upwardly revised estimate saw GDP growth of 0.4%.

The government, which faces a third review to its international bailout this autumn, has cut this year’s economic growth projection to 1.8% from 2.7% in May.

The commission has also cut its forecast to 2.1% from 2.7%. Greece’s central bank sees gross domestic product growing by 1.7% this year and picking up to 2.4% in 2018.

Economic recovery will be key to bringing down a jobless rate of 21%, the highest in the eurozone, and attaining this year a primary budget surplus of 1.75%—excluding debt servicing outlays%—demanded by Greece’s creditors.

Meanwhile, Greece’s leading IOBE think tank said on Tuesday the economy will expand by “slightly below” 1.5% this year and pick up to around 2% in 2018.

“The Greek economy’s growth rate in 2017 will be in the area of 1.3%, slower than was previously projected. Next year, growth will most likely accelerate to 2% or slightly higher,” IOBE said in its quarterly review. The think tank’s projections are below government forecasts.

Add new comment

Read our comment policy before posting your viewpoints