ECONOMY

Economy shrinks as jobs dwindle

Greece’s economy contracted in the second quarter for the first time since 1993 as the global recession hit consumption, investments and exports, data showed yesterday. Experts said the tourism sector will play a key role in determining the economy’s performance for 2009, describing third-quarter figures on gross domestic product as crucial. GDP in the second quarter declined by 0.2 percent from a year earlier, compared with a 0.3 percent expansion in the first quarter, according to figures released by the National Statistical Service (NSS). «Economic activity contracted on an annual basis for the first time in the last 16 years, the result of stagnant private consumption and an ongoing slump in private investment and lower income from export services,» National Bank economist Nikos Magginas told Reuters. The economy has been expanding without interruption since 1993, booming thanks to households taking advantage of the eurozone’s low interest rates to buy homes and consumer goods after Greece adopted the single currency in 2001. But it now faces the risk of protracted slow growth if the government fails to adopt structural reforms to boost competitiveness and correct its fiscal imbalances, the European Union and the International Monetary Fund have said. Economists point to the need for a new export-oriented growth model for Greece to prosper in a post-crisis world, succeeding the consumption-driven boom of the last decade. The economy grew 0.3 percent from the previous quarter which means Greece avoided a second straight decline in GDP in quarter-on-quarter terms that would have put the country technically in recession. The quarterly growth figure, which followed a 1.2 percent contraction in the first three months of the year, mainly reflects an accelerating fall in imports and the government’s expansionary fiscal stance, according to experts. Looking ahead, Ilias Lekkos, economist at Piraeus Bank, was cited by Bloomberg as saying that third-quarter figures «will be the real challenge» as they will include the bulk of tourist arrivals. Hoteliers and tour operators are forecasting a fall in revenue of up to 15 percent this year as the global downturn bites. Jobless rate jumps to 8.5 pct in May Unemployment rose to 8.5 percent in May from 6.6 percent in the same period a year earlier, with the jobless rates highest among young people and women, figures from the National Statistics Service (NSS) showed yesterday. The jobless rate for the 15-24 age group rose to 25 percent from 18.6 percent, while 11.5 percent of women were without work in May last year, up from 10 percent last year. A total of 420,401 poeple were looking for employment in May in Greece’s labor market, which comprises 4.55 million people, NSS data showed. The Foundation for Economic and Industrial Research (IOBE), a nonprofit research group, said in a recent report it sees unemployment as averaging out at 9.5 percent for 2009, taking into account a weaker tourism season this year. About 19,000 jobs in tourism were lost in the first half of the year after a 9.6 percent drop in visitor numbers, the Association of Greek Tourism Enterprises (SETE) said last month. Eurozone unemployment crept to its highest level in 10 years in May, hitting 9.5 percent from April’s 9.3 percent.