Annual recession target more distant than ever

Greece?s economy remained deep in recession in the second quarter of the year, as preliminary estimates by the Hellenic Statistical Authority (ELSTAT) showed on Friday that the economy shrank by 6.9 percent compared with the same quarter last year.

The recession rate posted a slowdown from the first quarter, when the economy had contracted by 8.1 percent, but showed an increase from the 4 percent shrinkage in the second quarter of 2010.

Gross domestic product keeps dropping as consumption decreases and investment has declined, while there is not a single sector in the economy that has not been affected by the crisis.

?The economy is marching across a big desert. The intensity and the extent of the recession is unprecedented, exceeding even the most pessimistic forecasts,? commented opposition New Democracy deputy Christos Staikouras, the party?s spokesperson on the economy.

With unemployment climbing to 16.6 percent in May and the new austerity measures from the midterm fiscal plan applying as of September, the target of containing recession to just 3.8 percent of GDP seems more distant than ever. In the first six months of the year it soared to 7.5 percent, while when the seasonal elements are factored in, it goes down to 4.5-5 percent on an annual level.

The government is now trying to step up its efforts to introduce much-needed reforms, as required by the European Union and the International Monetary Fund, with the troika representatives set to start their next monitoring visit to Athens on August 22.

More worrying for Greece?s creditors must have been the statement by the head of the new privatizations fund, Ioannis Koukiadis, to Skai Television on Thursday.

He suggested that the government ought to alter its sell-off program, stating that ?there is a problem with the decline of stock values. We need to delay privatizations or find an alternative solution so that we avoid a discount sale for companies such as the Thessaloniki Port Authority (OLTH) and the Thessaloniki Water and Sewage Company (EYATH).?