Greek Economy Shrinking Rapidly

Wall Street Journal
February 14, 2012

Greece's economy contracted at an annual rate of 7% in the fourth quarter, versus a decline of 5% in the previous quarter, official data showed Tuesday.

The recession, now in its fifth year, is steadily deepening after a bout of austerity measures took effect in September and growing doubts over the country's future in the euro zone are damaging confidence in the economy, according to economists. The figures, from the Hellenic Statistical Authority, or ELSTAT, aren't seasonally adjusted.

Starting in September last year, Greece implemented new austerity measures—mainly higher excise taxes, as well as new property and income taxes—that hit consumer spending and lessened overall economic demand. A political crisis in early November that led to a change in Greece's government also pushed consumer confidence to record lows.
Related Video

WSJ's Francesco Guerrera visits Mean Street with a Valentine's message: when expressing love this year, don't forget to show European banks some love too. They could use it. Photo: AP.

WSJ's Matina Stevis has details of what's next for Greece after leaders approved an austerity package calling for significant job and budget cuts. Photo: REUTERS/John Kolesidis

WSJ's Ben Casselman joins the News Hub to point out that while economic news and indicators have prompted optimism among analysis and observers, optimism was also high a year ago before things went sour. Photo: REUTERS/Lee Jae-Won

The Greek Parliament passed a controversial austerity package but hurdles remain, including the awaited reaction from sister European countries, Vincent Cignarella reports on Markets Hub. (Photo: REUTERS/John Kolesidis)

Greece expects its economy to contract by 5.5% in 2011, though this is now widely expected to exceed the 6% mark.

European Union negotiators have yet to settle key elements of a complex bailout and debt-restructuring package for Greece—including how euro-zone governments will contribute to a desired cut in the country's debt burden—ahead of a pivotal meeting this week.

More