Econ­omy re­turns to black in Q1

Min­istry says ex­pan­sion will help boost rev­enue col­lec­tion ef­forts; EU more down­beat on re­ces­sion

Kathimerini English - - Business & Finance -

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.

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