Greek Recession Deeper than Expected in 2013

Greeks-in-CrisisDespite the assurances of the Greek government that the country will recover by 2014, gross domestic product data released on Tuesday, show that the recession is getting deeper. According to the Greek statistics service ELSTAT, Greece’s GDP shrank by 3.9% in 2013, from an estimated 3.7% in February.

Since the break out of the financial crisis in 2008, household consumption has been reduced by 26%, unemployment has hit record rates and wage cuts have slashed family disposable incomes. As reported by ELSTAT, investments have fallen by almost two-thirds  as home-building activity has almost stopped. Moreover, imports of consumer goods and equipment fell in 2013 to almost half their level in 2008.

Although tourism is considered as the most profitable industry in Greece, it didn’t boost the economy as expected. Exports of goods and services increased by 1.8% in 2013 but they were still 15% below pre-crisis levels.

However, the Greek government as well as its international lenders appear optimistic and believe that the recession is coming to an end as Greece has managed to avoid a default and an exit from the euro zone. The Greek economy is expected to recover in 2014, rising by 0.6%.

Furthermore, there are encouraging signs that the Greek government is improving its fiscal management. The government reported on Tuesday a primary surplus of 2.1 billion euros for the first two months of the year, which is beating Greece’s targets by more than 1 billion euros.