Greece’s economy will shrink 5 percent this year and unemployment will hit 20 percent, hampering efforts to meet fiscal targets, the country’s most prestigious think tank (IOBE) said in its quarterly review on Monday.
The Foundation for Economic and Industrial Research projection is more pessimistic than EU Commission and International Monetary Fund estimates that see a GDP contraction of 4.7 to 4.8 percent this year as the debt crisis continues to ravage the economy.
Greece is set to apply more fiscal austerity to shore up its finances as part of a new rescue package it agreed recently with its euro zone partners and the IMF to avert a chaotic default. Economic recovery is not expected before 2014.
“We believe recession will be quite intense this year as well,” IOBE head Yannis Stournaras told reporters, urging a faster pace of privatisations to attract foreign investment.
The report said inflation will ease to levels below 1 percent from 3.1 percent last year as demand continues to weaken. It saw unemployment rising further, to 20 percent from a record 17.3 percent in 2011.