ECONOMY

Recession seen at 6 pct this year

Greece?s economy is now expected to shrink by no less than 6 percent of gross domestic product this year, as provisional data released on Friday by the Hellenic Statistical Authority (ELSTAT) showed a 5 percent contraction in the July-September period year-on-year.

The latest data indicate that GDP contracted by 6.9 percent in the first nine months of the year, which means it is practically impossible for the annual target of a 5.5 percent contraction to be met, as it would require GDP to shrink by no more than 1.1 percent in the final quarter of the year.

That appears unlikely given that the country?s economy all but seized up over the last few weeks over fears that the sixth tranche of loans to the Greek government would not be disbursed. Analysts expect the negative growth figure to come in between 2.5 and 3.5 percent in the October-December period, bringing the total GDP contraction for the year to 6 percent.

Data for the third quarter point to a considerable drop in economic activity in Greece: Investment contracted by 15.2 percent from last year, amounting to 6.5 billion euros, down from 7.7 billion euros in Q3 of 2010; private consumption declined by 5.5 percent to 33.7 billion euros from 35.6 billion; public consumption dropped by 3.9 percent to 8.5 billion euros from 8.9 billion; wholesale turnover dropped by 10.9 percent from the same quarter in 2010; and imports shrank by 4.3 percent to 14.2 billion euros from 14.9 billion.

Exports were the only exception, as they continued their expansion in Q3: They increased by 3.2 percent, from 13.4 billion euros last year to 13.8 billion this year.

All this means that the budget deficit will almost certainly swell to more than 9.5 percent of GDP, calling for extra measures from January.

ELSTAT also issued on Friday the October data for exports and imports, according to which exports grew by 10.6 percent to 1.77 billion euros, while imports continued to drop, this time by 33.8 percent from the same month in 2010, to come to 2.63 billion euros.