Greek recession slightly deeper than expected in 2013

By Harry Papachristou

Greece's economy has shrunk by almost 24 percent over the past six years in the deepest and most protracted peacetime recession in its history, according to revised gross domestic product data released on Tuesday.

Greek GDP shrank 3.9 percent in 2013, from an estimate of 3.7 percent in February, statistics service ELSTAT said.

Exacerbated by the austerity policies imposed by international lenders who bailed Greece out, the recession's main driver since the financial crisis hit in 2008 has been a 26-percent slump of household consumption, as record unemployment and wage cuts slashed family disposable incomes.

Greece also saw investment collapse by almost two-thirds over the same period as home-building activity virtually ground to a halt, Tuesday's figures showed.

With households and companies cutting spending and investment, imports of consumer goods and equipment sank last year to almost half their level in 2008.

Tourism, one of the country's biggest foreign-currency earners, soared last year but did relatively little to lift the economy.

Exports of goods and services rose by 1.8 percent in 2013 but were still 15 percent below pre-crisis levels, as frail European economies failed to absorb more Greek goods, mostly agricultural products and raw materials.

The recession, however, does seems to be bottoming out as confidence in the economy slowly returns after Athens has avoided chaotic default and an exit from the euro zone.

Most international organisations and the government expect the economy to modestly recover this year, rising 0.6 percent on the back of a rebound in investment and exports.

Greece's economic sentiment index rose in February to its highest level in more than five years, the Athens Stock Exchange is at a 2.5-year high and 10-year government bond yields have dropped below 7 percent, their lowest level since the country's 237-billion euro bailout started in 2010.

Optimism is also fuelled by signs that the government is improving its fiscal management. The central government reported on Tuesday a primary surplus of 2.1 billion euros in the first two months of the year, beating an interim target by more than 1 billion euros.

Greek GDP is revised frequently and ELSTAT does not provide seasonally adjusted quarter-on-quarter data, which most countries use to measure their economic performance.

Methodological changes also resulted into a slightly lower reading for 2012, with the new figures showing the economy contracting by 7 percent from a previous estimate of 6.4 percent.