Economy returns to black in Q1
Ministry says expansion will help boost revenue collection efforts; EU more downbeat on recession
Greece’s economyexpanded in the first quarter of the year, providing an unexpected bright spot on the country’s gray economic landscape in a development that will help boost state revenues, according to the government.
However, the European Commission predicted yesterday that Greece’s recession this year will be deeper than it had initially forecast and will send the budget deficit above official targets.
On a quarter-on-quarter basis, Greece’s 235-billion-euro economy expanded by 0.8 percent in the first three months of the year, after contracting by 2.8 percent in the last quarter of 2010. It was the first quarterly growth rate seen since the third quarter of 2009.
On an annual basis, Greece’s statistics office ELSTAT said the economy contracted at a 4.8 percent rate on the year, versus economists’ expectations for a decline of between 5.8 percent and 7 percent.
The better-than-expected figures were largely the result of strong growth in exports and a relative stabilization in consumer spending, according to economists.
The Finance Ministry said that the recession was showing signs of easing, which should help boost tax collection in the future. “The recession is becoming significantly shallower,” the ministry said in a statement.
“The easing of the recession and the positive rate of growth in the first quarter of the year is also a sign that public revenue will also improve from here on.”
The European Commission’s take on Greece was less upbeat as Brussels said in its spring outlook published yesterday that the local economy will shrink 3.5 percent his year, compared with a forecast contraction of 3.0 percent just two months earlier.
The report also said that Greece’s budget deficit, excluding planned new austerity measures, would hit 9.5 percent of gross domestic product in 2011, more than two percentage points above the 7.4 percent goal set out in this year’s budget.