Recession in shallower water

Finance Minister Giorgos Papaconstantinou said on Thursday that growth figures showed that the recession was becoming ?more shallow,? reiterating a forecast three percent dip in gross domestic product (GDP) for this year.

?The Greek economy in 2011 will start to exit the recession,? Papaconstantinou told reporters. ?We are at the worst point. We are at the point where sometimes you have a hard time seeing how you will get out of it. We will get out of it.?

Deep wage and pension cuts and increases in sales, alcohol and cigarette taxes have cut into consumer spending, leading to a 4.5 percent contraction in the economy in 2010.

Papaconstantinou added that Greece will detail new measures to maintain deficit cuts after the 110 billion-euro bailout expires, aiming to bring the budget shortfall to 1 percent of gross domestic product in 2015.

The government will detail deficit-reduction measures amounting to 8 percent of GDP for 2012 to 2014 by the end of March, said the minister as EU leaders meet to carve out a solution to stem the region?s debt crisis. Parliament will vote on the final package in mid-May

Papaconstantinou repeated targets set earlier this month by the EU and the IMF after a review of Greece?s progress.

These include a new plan to raise 50 billion euros in state asset sales, with 15 billion euros due by 2013 and 30 billion euros of guarantees to Greek banks that still rely on funding from the European Central Bank.

?It?s clear Greek banks are having trouble securing funding because of the problems of the Greek state,? Papaconstantinou said. ?We want this guarantees package to be the last.?

EU and IMF approval of Greece?s efforts will ensure payment of the next installment of 15 billion euros in March.

Greece is banking on a comprehensive package from the EU that will stem borrowing costs and allow the country to return to international markets for financing this year.

An extension of maturities ?helps a lot? because Greece faces a debt ?hump? in 2014 and 2015, Papaconstantinou said. ?It will take time to get a final decision.?

Subscribe to our Newsletters

Enter your information below to receive our weekly newsletters with the latest insights, opinion pieces and current events straight to your inbox.

By signing up you are agreeing to our Terms of Service and Privacy Policy.