ECONOMY

GDP fell by almost 7 pct last year

The country?s economy contracted more than expected last year, as the figures released on Friday by the Hellenic Statistical Authority (ELSTAT) showed that gross domestic product shrank by 6.9 percent in 2011.

Greece?s fourth consecutive year in recession ended with a GDP decline of 7.5 percent in its last quarter, against an ELSTAT estimate for a 7 percent contraction reported on February 14.

Total consumer spending fell 7.9 percent in the October-December period compared with the same quarter in 2010, while gross capital investment dropped by 22.2 percent. Even exports posted a 6.1 percent decline year-on-year.

Due to the recession, imports fell as well, by a considerable 14.2 percent rate. This represents a welcome 31.8 percent narrowing of the trade gap, which offsets some of the GDP contraction.

With unemployment at 21 percent in December, the industrial output index fell by 11.3 percent in the same month from December 2010. The retail turnover index shrank 10.2 percent in 2011 from the year before, the wholesale trade turnover dropped in the last quarter of 2011 by 20.3 percent from the same quarter in 2010, and the volume of construction activity declined in November by 26.6 percent from November 2010.

While the recession and unemployment spin out of control, the government has done very little to deal with the two issues. For instance, the Development Ministry, which has a central role in the growth effort that involves 11 other ministries, presented a detailed draft law in November for the improvement of the business environment. The bill took two months to clear the Cabinet, which it did on January 12, but it is yet to be tabled in Parliament. Given the recent change in the political leadership of the ministry, it is likely that the delays will continue.

Other ministries are also plagued by delays, so plans for the liberalization of a number of professions, the introduction of free trade zones, the opening up of the cruise sector and other government decisions have not yet been implemented.