ECONOMY

IMF sees deeper 2012 recession

The International Monetary Fund on Tuesday upped its forecast of contraction for the Greek economy this year, in line with an increasingly gloomy global outlook.

The economy will not recover in 2012, as previously expected, and unemployment and debt will keep rising, the IMF said in its autumn report.

Gross domestic product is seen contracting by a further 2 percent, after a projected slide of 5 percent this year, reversing a forecast last June, when the IMF saw GDP falling 3.8 percent this year and returning to recovery with 0.6 percent growth in 2012.

Biting austerity measures, agreed to under pressure from Greece?s international creditors, seem to be depressing the country?s ailing economy further still.

Greece?s GDP shrank 7.3 percent in the second quarter from a year earlier, after a decline of 8.1 percent year-on-year in the first quarter, the Hellenic Statistical Authority said on Tuesday.

The IMF sees unemployment climbing from 12.5 percent last year to 16.5 percent this year and 18.5 percent in 2012. Among European Union states, only Spain is seen faring worse than Greece, with the jobless rate falling from 20.7 percent this year to 19.7 percent next year.

An increase in the number of jobless is also expected for Portugal, from 12 percent last year to 12.2 percent this year and 13.4 percent in 2012.

The IMF?s projection for Greece?s public debt this year remains unchanged at 166 percent of GDP, but is forecast to increase to 189 percent in 2012 from 172 percent in June. It is then seen falling to 188 percent in 2013, 179 percent in 2014 and 165 percent in 2015.

The projections are based on the assumption of no default for any individual country.

The IMF has also revised downward its growth projections for the eurozone to 1.6 percent in 2011 and 1.1 percent in 2012, from respective figures of 2 percent and 1.7 percent previously.

For Greece, the report forecasts that the consumer price index will slow down from 4.7 percent last year to 2.9 percent in 2011, and will in fact fall 1 percent next year.

The only positive forecast for Greece concerns its current account balance, where the deficit is seen shrinking from 10.5 percent of GDP in 2010 to 8.4 percent this year and 6.7 percent in 2012.