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Bloomberg News

Greek Economy Shrank 6.8 Percent in 2011, More Than Forecast

February 15, 2012

(Updates New Democracy reaction in seventh paragraph. For more on Europe’s debt crisis, click on EXT4.)

Feb. 14 (Bloomberg) -- 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, according to Bloomberg calculations.

Gross domestic product fell 7 percent from a year earlier in the fourth quarter after contracting a revised 5 percent on an annual basis in the previous three months, the Athens-based Hellenic Statistical Authority said in an e-mailed statement today. GDP declined 6.8 percent in 2011, according to Bloomberg calculations, compared with a 6 percent 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 SA in Athens.

Greece is now in its fifth year of a recession. Prime Minister Lucas Papademos’s government on Feb. 13 passed through Parliament a new package of austerity measures demanded by the so-called troika of the European Commission, International Monetary Fund and European Central Bank in exchange for a 130 billion-euro ($172 billion) rescue. It got its first financial lifeline in May 2010.

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.

Slump Deepening

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 percent the IMF forecast in a December report. The unemployment rate in November rose to 20.9 percent, 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 percent in the three months through March and 7.3 percent in the second quarter, the agency said. It didn’t provide seasonally adjusted figures.

--With assistance from Maria Petrakis in Athens. Editors: James Hertling, Simone Meier

To contact the reporter on this story: Marcus Bensasson in Athens at

To contact the editor responsible for this story: Craig Stirling at

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