Greece GDP dives as cabinet aims to back austerity

Reuters
June 9, 2011

Greece's economy shrank far more than expected in annual terms at the start of 2011, signalling a second wave of austerity measures demanded by the EU and IMF will pile even more pain on a fractious society.

Athens plan for avoiding a debt default and tackling its budget crisis depends on squeezing revenue out of the economy, but sharp downward revisions to first quarter data suggested the mountain the government must climb is even higher than thought.

Gross domestic product tumbled 5.5 percent in the first three months of this year, the official numbers showed, far more than a earlier of flash estimate of 4.8 percent.

Emilie Gay, an economist at Capital Economics, said that bode ill for Greek attempts to meet targets for cutting the budget deficit which the international lenders have prescribed.

"We expect the economy to contract by 5 percent this year. For us this means Greece will fail to meet its targets as it did last year," she said.

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