Greece, confounding creditors, fell in recession again last year


Greece’s economy fell into recession again last year, confounding its international creditors who had predicted some growth after years of budget austerity.

The economy contracted by 0.2 percent in 2016, statistics service ELSTAT said on Tuesday, releasing its revised estimate of full-year gross domestic product.

ELSTAT’s estimate, based on seasonally unadjusted data was based on lower than previously estimated household consumption.

It said gross domestic product in volume terms and measured at constant prices was 175.9 billion euros last year, down from 178.1 billion euros in 2015.

Final consumption dropped by an annual 0.3 percent, versus a 0.6 percent rise estimated by the agency in March.

“It’s a small change that has minor impact on other indices and on fiscal figures. It is a slightly weaker depiction of the real economy in 2016 due to the downwardly revised consumption expenditure,” said National Bank economist Nikos Magginas.

He said that the registered trend in consumption would also be a challenge for 2017.

Years of austerity imposed by the International Monetary Fund and European Union in exchange for bailouts have made many Greeks far poorer and shrunk consumption accordingly.

The European Commission, in its winter forecast published in February, projected GDP growth of 0.3 percent in 2016 while the International Monetary Fund’s upwardly revised estimate saw GDP growth of 0.4 percent.

The government, which faces a third review to its international bailout this autumn, has cut this year’s economic growth projection to 1.8 percent from 2.7 percent in May.

The Commission has also cut its forecast to 2.1 percent from 2.7 percent. Greece’s central bank sees gross domestic product growing by 1.7 percent this year and picking up to 2.4 percent in 2018.

Economic recovery will be key to bringing down a jobless rate of 21 percent, the highest in the eurozone, and attaining this year a primary budget surplus of 1.75 percent – excluding debt servicing outlays – demanded by Greece’s creditors. [Reuters]