By Sotiris Nikas
The recession in Greece is beating even the most pessimistic forecasts as the economy contracted by 6.5 percent in the year’s first quarter, according to data released on Friday by the Hellenic Statistical Authority (ELSTAT), leading to a revision in estimates for the whole of 2012.
ELSTAT’s provisional data were worse than the original estimates for the January-March period, which forecast a 6.2 percent contraction in the country’s gross domestic product. The development serves as a warning that there are worse days to come for the country’s economy as the climate has deteriorated considerably since April given that in the meantime worries of a Greek exit from the eurozone have increased.
Officially the forecast for the whole of the year is for a 4.7 percent contraction, but unofficially this has already been revised, with estimates pointing to a 6 percent GDP contraction.
The country’s output amounted to 40.6 billion euros in the year’s first three months, which was the worst quarter since 2005, when comparable data was first collected.
The GDP decline is attributed to the major decline in investment and consumption. Investment fell by 21.3 percent to come to just 5.3 billion euros in Q1, the worst for a long time in the Greek economy. Private and public onsumption shrank by 7.5 percent: Private consumption declined by 8.5 percent from the same quarter in 2011 to 31.8 billion euros, although it actually posted a small rise from the last quarter of 2011, when it had stood at just 31.1 billion euros. State consumption dropped 3.2 percent to 7.9 billion euros.
Inflation and exports did bring some more positive news, though. The inflation rate, based on a European Union measure, dropped to 0.9 percent in May from 1.5 percent in April. Exports posted growth of 1.4 percent in the year’s first quarter against the same period in 2011, while imports declined by 16.6 percent due to shrinking consumption.
The current account deficit contracted by 41.9 percent, somewhat offsetting the decline of the gross domestic product.