Greek recession slows but strong second half of 2013 needed to meet target

Although figures released on Monday showed a slowing of Greece’s recession, with the economy contracting by 4.6 percent of gross domestic product in the second quarter of the year, there is still much ground to be covered in the second half of the year if the government’s forecasts are to be proved correct.

The Hellenic Statistical Authority (ELSTAT) said that the economy shrank by 4.6 percent between May and June, compared to 5.6 percent in the first quarter and 6.4 percent in the second quarter last year. This indicates that the contraction Greece has experienced since the third quarter of 2008 is slowing down but there are still doubts about whether the government’s target of 4.2 percent negative growth for the whole year will be achieved.

The Greek economy shrank by 5.1 percent in the first half of the year, which means that it will need to contract by no more than 3.3 percent in the second half for the forecast to prove accurate. Substantially increased tourism revenues, among other things, will be needed for this target to be met.

The Finance Ministry is hopeful that its goal is within reach but the troika is concerned that the final quarter of the year may prove less positive than Athens would have hoped for.

The figures for GDP contraction in the third quarter will form a key point of discussion when the troika returns in September for its latest review of the Greek adjustment program. Prime Minister Antonis Samaras resumed contact with ministers on Monday after his trip to the USA to ensure that they will be ready when Greece’s lenders come back to Athens.

The issue of repossessed homes being auctioned will also be on the agenda in the months to come. The troika has been pressing Greece to lift the moratorium. Government spokesman Simos Kedikoglou confirmed on Monday that the coalition is planning to end a moratorium on the auctioning of repossessed homes despite vehement opposition by many MPs but insisted that low-income citizens would be exempt from the measure.

“Those who can pay will pay,” Kedikoglou told ANT1 channel, noting however that the unemployed and those with more than four children will not be forced to.

Reacting to statements by Kedikoglou and other government officials, opposition parties accused the authorities of trying to launch the controversial measure at a time when most Greeks are on their summer holidays in a bid to minimize protests. Leftist SYRIZA MP Nikos Voutsis warned that if the coalition went ahead “it will probably suffer the political accident it has dreaded,” an apparent reference to snap elections.