As Greek Prime Minister Antonis Samaras says he has turned the country around and sees a recovery by next year, figures released by the Hellenic Statistical Authority (ELSTAT) on June 7 showed the economy contracted by 5.6 percent in the first quarter of this year, worse than expected. Rosy government estimates about the economy have usually been proved wrong.
The flash estimate published in May foresaw shrinkage of 5.3 percent. The Gross Domestic Product (GDP) has been shrinking since the third quarter of 2008 and fallen some 25 percent as austerity measures imposed by the government on the orders of international lenders have largely backfired, creating a record 27 percent unemployment and closing scores of thousands of businesses.
Despite big tax hikes to go along with big pay cuts, slashed pensions and a cut in the minimum wage, tax revenue expectations are far off estimates as Greeks have slowed spending. Total final consumption expenditure recorded a decrease of 8.3 percent in comparison with the first quarter of 2012.
Gross fixed capital formation decreased by 11.4 percent in comparison with the 1st quarter of 2012. One hopeful sign was that the external trade deficit decreased by 22.9 percent, contributing positively to the GDP percent change.
Exports decreased by 2.6 percent in comparison with the firstt quarter of 2012. Exports of goods increased by 4.9 percent while exports of services declined by 12.4 percent. Imports decreased by 7.8 percent in comparison with the 1st quarter of 2012. Imports of goods decreased by 5.3 percent and imports of services declined by 17.8 percent.