Recession, unemployment bite into country’s economy

GDP contracts by 6 pct in Q4 of 2012, returning to 2001 levels

The Greek economyhas dropped back to 2001 levels, as in the last quarter of 2012 its gross domestic product amounted to just 40.6 billion euros, according to Hellenic Statistical Authority (ELSTAT) figures.

After the 6.45 percent contraction seen in 2012, the government expects GDP to shrink further by 4.5 percent this year, although its international creditors are anticipating negative growth of 4.2 percent. It is universally accepted that the recession will continue this year, with some analysts even expecting it to carry on into 2014, although the Finance Ministry still harbors some hope the rebound will start in the last quarter of this year.

Official data showed yesterday that fourth-quarter GDP in 2012 was reduced by 6 percent from the same quarter in 2011, when it had come to 43.2 billion euros.

This is attributed to four main factors: the uncertainty regarding the future of Greece in the eurozone that prevailed in the last quarter of last year; the decline in investment illustrated by the 66.6 percent drop in building permits in November; the constant drop in consumption due to sliding disposable incomes; and the deterioration of the trade balance, as according to sources its effect on GDP in the October-December period was negative. Although for the whole of the year exports amounted to a record level of 23.8 billion euros, in December they declined by 13.4 percent from the previous year.

The constantly contracting GDP has had a dramatic impact on the real economy, with unemployment reaching 27 percent in November as the number of the jobless has topped 1.35 million people, according to ELSTAT. Worse still, the forecasts published yesterday by the Center of Planning and Economic Research (KEPE) put the jobless rate at 30.1 percent this year from an estimated 24.6 percent last year on average. KEPE also expects the economic contraction to end up at 4.1 percent this year.