Greece’s economy contracted from October to December after two straight quarters of growth, statistics service (ELSTAT) said on Monday, with its performance in the last quarter of 2016 turning out worse than projected in February.
The seasonally adjusted, revised data showed a 1.2 percent decline in economic output in the fourth quarter, a worse performance than a 0.4 percent slump projected in February’s flash estimates.
Facing a bailout review entailing a liberalization of labor laws, Athens is keen to show that taxation and pension cuts that came with last year’s 86-billion-euro aid deal will bear fruit and lead to recovery this year.
Earlier, Prime Minister Alexis Tsipras told a cabinet meeting the economy was turning a page, poised to show “exceptionally high” rates of growth this year.
Recovery will be key to bring down an unemployment rate of nearly 23 percent, the highest in the eurozone, and attain a projected primary budget surplus of 1.75 percent – excluding debt servicing outlays – demanded by Greece’s creditors.
The data showed the 175 billion euro economy shrank at an annual 1.1 percent pace in the fourth quarter versus earlier projections of 0.3 percent growth.
The EU and the IMF expect the economy to rebound by 2.7 percent this year, while the Bank of Greece projects it will expand by 2.5 percent, provided the second bailout review, which has dragged on for months, is concluded soon.
“The data revision points to a full-year 2016 real GDP growth of -0.1 percent versus a 0.3 percent expansion suggested by the previous flash estimates,” Eurobank economist Platon Monokroussos said.
Looking at the components of gross domestic product, the main drivers behind the decline in economic output were weaker public consumption and a negative contribution from net exports.
Consumption fell 1.1 percent compared to the third quarter, with imports rising by 4.5 percent while exports declined 1.4 percent. Gross capital formation rose 1.8 percent from the previous quarter.
“Private consumption remained on a positive trajectory for the third consecutive quarter, despite the tax burden,” Monokroussos said.