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Greek Economy to Contract By 3.8% in 2013

Greece’s economy is expected to contract by more than expected in 2013, in its sixth year of recession, according to a draft budget the government will submit to parliament Monday, under the weight of the next round of painful austerity measures demanded by international creditors, two senior officials said.
According to a senior government official, the economy is seen contracting by an annual pace of 3.8% next year–bringing the estimate in line with what private sector economists have been saying–but also acknowledging earlier forecasts from Greece’s international creditors were hopelessly optimistic. In spring, the European Commission, which backs Greece’s bailout along with the International Monetary Fund, foresaw Greece’s economy flatlining next year, suggesting that its depression-era-like contraction was poised for a modest recovery.
The budget will also include a large chunk of the 13.5 billion euros ($17.4 billion) in spending cuts and revenues measures international inspectors will assess Monday as they resume meetings with Greek government officials on steps needed to open the way for the country’s next aid tranche from its second EUR173 billion bailout.
“Cuts of some EUR7.8 billion will be included in the budget on items such as operating government expenditures,” said an official from one of the parties taking part in the coalition government speaking on the condition of anonymity.
Next year’s forecast recession is milder than the 7% contraction Greece’s economy is expected to show for 2012 but will extend the country’s economic pain as unemployment rates hit record highs and business bankruptcies soar.
(source: dow jones)

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