Economic growth slows sharply

Gross domestic product (GDP) growth slowed sharply in the first quarter of the year but is likely to have avoided dipping into negative territory, sources indicated yesterday. Greece’s 250-billion-euro economy has been decelerating under the weight of the global crisis as investments drop and deteriorating labor markets weigh on consumption. Expansion of GDP – the total value of final goods and services produced by an economy – in the last quarter of 2008 cooled to 2.4 percent year-on-year, from 2.7 percent in the previous quarter, its slowest pace since the country joined the eurozone in 2001. Economy and Finance Minister Yiannis Papathanassiou said yesterday there is hope that economic growth will stabilize in the second half of 2009 before a rebound in 2010. «I say this with great reluctance, as no one can be certain of these forecasts,» the minister told a general assembly of the Hellenic Federation of Enterprises. Greece is so far sticking by its growth forecast of around 1 percent for 2009, saying economic activity will depend to a large extent on tourism, which accounts for about a fifth of the economy. The European Commission last week said it sees Greece’s economy sliding into recession in 2009 for the first time since 1993, shrinking by an annual pace of 0.90 percent. Meanwhile, European Central Bank President Jean-Claude Trichet, who chaired a meeting of global central bankers yesterday, said policymakers are seeing the first signs of economic recovery. «As far as growth is concerned, we’re around the inflection point in the cycle, that’s the sentiment,» Trichet said. A number of recent reports are «encouraging, but it’s no time for complacency,» he added. The National Statistics Service, the government’s statistics service, is scheduled to release provisional data on Greece’s first-quarter GDP expansion rates on Friday.

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