ECONOMY

Recession in Q2 worse than estimated

The Greek economy is shrinking faster and more dramatically than originally anticipated, as official figures showed on Thursday that the recovery promised by the government is nowhere to be seen.

Greece?s recession in the second quarter of the year was deeper the statistics authority?s estimate, as the official figure announced on Thursday was 7.3 percent of gross domestic product, against an estimate of 6.9 percent. The Hellenic Statistical Authority (ELSTAT)?s announcement about the contraction of GDP in months of April through June from the same period in 2010 came along with a revision of the recession during the first quarter of the year, now confirmed at 8.1 percent.

The government has revised its recession forecast for the whole of the year from 3.5 percent to 5 percent. The deepening of the recession is due to the considerable decline in consumer spending, by 6.8 percent, the drop in gross investment by 17.9 percent and the reduced exports and imports of goods, compared with the same quarter last year. The difference of 0.4 percent is attributed to the availability of new data, mostly about the service sector turnover index. After the new contraction of the Greek GDP, recession came to 7.7 percent in the first half of the year against 2.35 percent in the 2010 January-June period. In the second quarter of 2011 private consumption declined by 6.1 percent and state consumption by 9.7 percent, owing to the drastic cut in the state?s operating expenditure. The decline in GDP was somewhat offset by the shrinking by 26.5 percent of the country?s trade deficit.

Unemployment came to 16 percent in June, compared with 11.2 percent in the same month last year. The seasonal factor (summer jobs in tourism) allowed for a decline from May?s 16.6 percent.

Other official data issued on Thursday that illustrate the enduring nature of the recession were the 2.2 percent annual decline in turnover in accommodation and catering enterprises in the year?s second quarter, the 15.3 percent year-on-year drop in the number of building permits issued in May, and the 10 percent increase in company closures over the last 12 months to August.