Greece Recession Eases As Government Eyes 2013 Budget Surplus
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Greece’s economy shrank by 4.6 percent on an annual basis in the second quarter, marking a gradual deceleration of the country’s longest recorded recession, while the government reported a surplus for the first seven months of the year, official data showed on Monday.
While the contraction in Q2 marked a 20th consecutive quarterly decline, officials say it was an improvement from the first quarter of 2013, when the economy contracted 5.6 percent compared with a year earlier.
Greece’s economy shrank by 4.6 percent on an annual basis in the second quarter, marking a gradual deceleration of the country’s longest recorded recession, while the government reported a surplus for the first seven months of the year, official data showed on Monday.
While the contraction in Q2 marked a 20th consecutive quarterly decline, officials say it was an improvement from the first quarter of 2013, when the economy contracted 5.6 percent compared with a year earlier.
The Greek economy has slumped 23 percent in real terms since 2008, making it in one of the biggest peace-time recessions recorded in history, with unemployment of nearly 28 percent.
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In a commentary from Capital Economics, economist Ben May said that “the improvement in the economic situation has been much less pronounced than the business surveys had suggested.”
Calling the official data “encouraging”, May said the “troika’s forecast for a 4.2 percent annual decline in 2013 looks achievable” but cast doubt over the chances of a “full-blown economic recovery next year”.
According to May, it remains “plausible” that the Greek economy will continue shrinking into 2015, forecasting a 2 percent decline in GDP for next year, followed by a 0.5 percent contraction in 2015.
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On Monday, the government said that Greece was on track for a primary budget surplus, excluding interest payments on debt, this year. The surplus resulted mainly from higher-than-projected inflows of EU structural aid, lower outlays on public investment projects and a one-off 1.5billion euros payment from eurozone central banks out of profits made on Greek government bonds.
Nonetheless, achieving a primary surplus in 2013 would open the way for Greece to seek further debt relief from its eurozone partners and bring a sustained recovery closer.
“The latest figures confirm an improving fiscal trend that brings a surplus closer … and helps rebuild consumer and business confidence,” said Deputy Finance Minister Christos Staikouras.
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On Sunday, German weekly publication Der Spiegel, citing an internal document from the Bundesbank, reported that Greece might need another bailout rescue because it was unable to get on top of the crisis, despite funding from the IMF and EU.
But the German finance ministry was quick to reject the rumour. On Monday, finance ministry spokesman Martin Kotthaus said he was not aware of a new document from the Bundesbank and did not know which document the Spiegel article refers to.
“The numbers we have speak clearly – Greece is coming along well,” Kotthaus told reporters. “We’ll look at what Greece does, we’ll look at how Greece implements the programme, we’ll see if Greece achieves a primary surplus in 2014 – that’s the agreement – and then if we ascertain that more money is needed, we will discuss it,” he said, adding it is difficult to speculate on anything that could happen in 2014.
