Greek contraction not worst in Europe but still steep

Greek contraction not worst in Europe but still steep

Greece's GDP shrank 14% between April and June, marking the steepest quarterly contraction in at least 25 years and threatening to undermine a decade of hard-won gains for the recently bailed-out economy.

The record slump, announced by statistics service ELSTAT, was not Europe's worst, but it confirmed expectations for a sharp contraction over the second and third quarters, induced by the lockdown that authorities imposed in March to contain the coronavirus.

Greece lost about a quarter of its economic output during its 2010-2018 debt crisis, which rocked the euro zone and forced it to sign up to three international bailouts in exchange for unpopular austerity-focused reforms.

However, during that period the economy's worst quarterly contraction, in the first three months of 2009, was a comparatively modest 4.7%, according to ELSTAT.

Greece emerged from its third bailout programme in August 2018.

It still has the highest debt to GDP ratio and was looking forward to a strong recovery this year. But with the impact of the pandemic it now sees its tourism-reliant economy shrinking by up to 10% in 2020.

Thursday's seasonally adjusted data showed that exports of services fell 48.3% compared to the previous quarter.

On an annual basis, the economy contracted 15.2% in the second quarter from an upwardly revised 0.5% in the first, when it fell back into recession.  [Reuters]