By Sotiris Nikas
The Greek economy posted its smallest contraction in four years during the first quarter of 2014, shrinking by 1.1 percent against 6 percent in the same period last year, according to data released on Thursday by the Hellenic Statistical Authority (ELSTAT).
The figures have increased Finance Ministry optimism that after the six-year recessionary cycle, growth could in fact turn out to be more than the 0.6 percent forecast in the 2014 budget.
Greece is expected to return to positive growth rates within 2014 after six years of deep recession as a cycle is closing and a new one is opening, Finance Minister Yannis Stournaras commented yesterday. “The challenge now is not just for the economy to recover, but to create a new, more extrovert growth model for the benefit of citizens and enterprises,” he said while addressing the German-Greek Chamber of Commerce and Industry.
The last time the Greek economy saw such a low contraction level was in the first quarter of 2010, when it shrank by 1 percent, meaning that the economic decline has slowed to a level last seen before the country entered the bailout process in spring 2010.
Gross domestic product amounted to 36.8 billion euros in the January-March period from 37.2 billion a year earlier, with ministry officials saying that this small contraction marks the end of the recession as they expect the economy to revert to growth from the current quarter, providing the following conditions are fulfilled:
-- Tourism arrivals and revenues must record growth compared with last year, as forecast by authorities.
-- Consumption must increase following the distribution of the so-called social dividend.
-- Market liquidity must improve following the payment of the state’s expired debts to the private sector.
Officials say that if the above conditions are fulfilled, GDP will not only grow by the 0.6 percent officially forecast but even more, although they urge caution for fear of unforeseeable events.