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Greek Economy Slumps Further In Fourth Quarter

Greece was plunging deeper into recession at the close of last year, documenting the devastation of the country’s economy even before new austerity plans are implemented in the months ahead.
Greece’s gross domestic product contracted by an annual rate of 7% when adjusted for inflation, according to preliminary data reported by the Greek government statistics office Tuesday. The dire number was far worse than forecasts of a decline of up to 5%, and showed an accelerating contraction from the 5% year-on-year fall clocked in third quarter.
The deepening of Greece’s economic decline, now in its fifth year, came after an earlier rash of harsh austerity measures was imposed last September. Contributing to the malaise has been deteriorating consumer sentiment as double-digit unemployment creeps higher and doubts grow over the country’s future and its membership in the euro zone.
“We were expecting the recession to get worse but not at this pace,” said Nikos Magginas, senior economist at National Bank of Greece.
Greece’s sinking economy has overshadowed its talks with its European partners, who are demanding still more fiscal tightening as a condition for a new bailout agreement. Finance ministers from the 17 countries sharing the euro are scheduled to meet in Brussels on Wednesday to review Greece’s proposals to fill 2012 budget gaps.
The latest economic figures mean that the downturn last year was far worse than the government’s forecast for a 5.5% decline in 2011, with economists now forecasting a contraction of around 6.7% to 6.8% for last year.
If those forecasts are borne out when revised GDP figures are released early next month, Greece’s recent upward revision in its 2011 budget-deficit forecast might prove to have been overly optimistic.
(source: ELSTAT, Dow Jones)

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