ECONOMY

In Brief

Economy contracted by 0.7 pct in Q2, says poll Greece’s economy contracted 0.7 percent year-on-year in the second quarter after slowing to a 0.3 percent expansion pace in the first quarter, according to the median forecast of economists surveyed by Reuters. Greece’s 250-billion-euro economy, about 2.5 percent of the eurozone, is feeling the impact of the global downturn after years of 4 percent growth. Manufacturing and construction are contracting, with tourism also looking weak this year. «Economic activity is expected to have moved to negative territory, hurt by weak consumer spending, shrinking investment, continuing inventory depletions and declining services exports,» said economist Nikos Magginas at National Bank. But, he said, compared to the eurozone, Greece’s economy would remain «considerably more resilient.» Another negative print in the second quarter after a 1.2 percent contraction on a quarterly basis in the first three months of the year will mean Greece’s economy has officially entered recession – its first since 1993. (Reuters) Romanian banks to boost capital by 1 billion euros Romanian banks representing 70 percent of the lending industry signed an agreement with the International Monetary Fund to boost their capital by 1 billion euros ($1.4 billion) as overdue debt rises. The foreign-owned banks, including Erste Group Romania, Raiffeisen International and Societe Generale, agreed to raise their capital by March of next year and will discuss other measures to ensure banking stability with the IMF and the government, the IMF said in a news release today. The agreement «confirms two key commitments from the parent banks in support of the Romanian economy,» the IMF said. «Namely to maintain their overall exposure to Romania and to increase the capital of their subsidiaries.» Overdue debt is surging after the leu weakened 15 percent against the euro in the past year, swelling euro-denominated obligations, which soared after Romania joined the European Union in 2007. Romania’s banking industry is dominated by Banca Comerciala Romana SA, owned by Austria’s Erste Bank AG, and BRD-Groupe Societe Generale. Other foreign-owned banks in Romania that pledged to maintain or boost capital include Alpha Bank SA, EFG Eurobank Ergasias SA, National Bank of Greece SA, Oesterreichische Volksbanken AG, Piraeus Bank SA and UniCredit Group SA, the IMF said. (Bloomberg) DryShips deal DryShips Inc, whose ships transport raw commodities including iron ore and coal, said it agreed with West LB on waiver terms for $71 million in outstanding debt. The facility covers two vessels, Chief Executive Officer George Economou said in a statement. The Athens-based ship owner operated a fleet of 37 vessels as of the end of the second quarter. The shipowner has been issuing shares and renegotiating loan covenants after breaching terms because the value of its vessels dropped when the shipping market declined. (Bloomberg) Cypriot inflation Cyprus’s European Union-harmonized inflation rate fell 0.8 percent in July from a year earlier, compared with a 0.1 percent increase the previous month, the Cypriot statistics service said on its website. (Bloomberg)