ECONOMY

Discipline intact for first two months

Greece’s economy may contract more than 0.8 percent this year but the government is ahead of schedule with plans to tame its budget deficit, the Finance Ministry said yesterday. In a report sent to the European Commission, Greece said that a revision to 2009 growth figures «is expected to contract real GDP more than the 0.3 percent already forecast for this year, with the carry-over effect seen at minus 0.9 percent.» «There is little doubt that the reduction in the disposable income of households, linked to the reduction in wages and salaries of public sector employees and the worsening macroeconomic environment, is likely to reduce real consumption expenditures in 2010,» the report added. Forecasts for Greece’s economic performance this year have become more downbeat after the government’s recent austerity measures, with experts predicting the economy to contract by up to 4 percent this year. Yanos Gramatidis, the president of the American-Hellenic Chamber of Commerce, said yesterday Greece could be in recession for the next few years with a possible economic rebound not expected until the second half of 2013. The ministry’s report added that the downturn at home will be partly mitigated by a more robust recovery in the global economy, which will help improve the country’s external balance more than has been forecast in the stability plan. «Overall, the external sector is projected to have a positive contribution to GDP growth on both the export side as well as the import side. The latter is likely to contract due to the restrictive fiscal and income measures introduced over the last couple of months,» it said. On the fiscal front, the ministry said the implementation of the Stability and Growth Plan to cut the budget deficit to 2.8 percent of gross domestic product by 2012 from close to 13 percent last year was ahead of schedule with no slippage on the spending side. But revenues for the first two months of the year rose by 7.9 percent, «somewhat lower than the target,» it added.