Greece to see out year in recession

Financial Times
July 3, 2011

The European Union has warned that Greece will stay in recession for the rest of this year, upending forecasts of a return to growth in the third quarter.

The economy is set to shrink 3.75 per cent in 2011 and will show only marginal growth in 2012, according to the European Commission’s quarterly report on the debt-stricken country’s reform effort.

“Contrary to earlier expectations, economic activity is expected to continue contracting in the second half of 2011 as additional fiscal consolidation and liquidity constraints are taking their toll on the economy,” it said.

Weaker activity this year on the back of the extra measures “implies a smaller growth rate – 0.6 per cent – in 2012”.

The report, by experts from the commission and the European Central Bank, was made public after European finance ministers approved a loan tranche of €8.7bn on Saturday, ensuring that Athens would be able to meet debt repayments due this month.

More