Bloomberg News

Greek Third-Quarter GDP Shrank 5.2 Percent From Year Earlier

November 16, 2011

(Updates with economist’s comment in third paragraph.)

Nov. 15 (Bloomberg) -- Greece’s economy contracted at the slowest pace in a year in the third quarter as tourist spending increased.

Gross domestic product shrank 5.2 percent from a year earlier after contracting a revised 7.4 percent on an annual basis in the second quarter, the Athens-based Hellenic Statistical Authority said in an e-mailed statement today. The preliminary figure is based on available non-seasonally adjusted data, the authority said. The agency didn’t provide a seasonally adjusted figure.

“The rate of recessionary momentum has slowed in the third quarter, probably due to support from the tourism sector and also due to the rapid contraction of import spending,” Nicholas Magginas, an economist at National Bank of Greece SA in Athens, said by phone. Tourist spending in the first eight months of the year was 10 percent higher than a year earlier, according to Bank of Greece data.

Greece’s recession, now in its fourth year, has been exacerbated by austerity measures as the country seeks to cut a budget deficit forecast to be 8.9 percent of GDP this year. Prime Minister Lucas Papademos, who formed a government on Nov. 11, is charged with implementing budget measures in exchange for an Oct. 26 European bailout amounting to 130 billion euros ($177 billion).

Papademos, in his first Cabinet meeting last week, said that joblessness remains a key challenge for the country. The unemployment rate rose to 18.4 percent in August from 16.5 percent in July, the highest since the series began in 2004.

GDP is forecast to shrink 5.5 percent this year and 2.8 percent in 2012, before expanding 0.7 percent in 2013, according to European Commission forecasts.

Those figures could underestimate the extent of the economic contraction this year, according to Magginas, who predicts a 5.9 percent contraction. The recession is likely to accelerate in the fourth quarter as the effects of new tax increases and worsening economic sentiment took hold, he said.

--With assistance from Maria Petrakis in Athens. Editors: Jeffrey Donovan, Andrew Davis

To contact the reporter on this story: Marcus Bensasson in Athens at mbensasson@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net


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