Greek Economy Shrank by 0.2% in Q1‏ and Revenue Collapse in May

Euro moneyThe Greek economy shrank by 0.2 pct in the first quarter of 2015, in contrast with the Eurozone and the EU-28 which grew by 0.4 pct in the January-March period, Eurostat said on Tuesday.

In a report released here, the EU executive’s statistics office said that based on revised figures, the Eurozone and the EU-28 GDP grew 0.4 pct in the first quarter compared with the fourth quarter of 2014, based on a 0.4 pct increase in household consumption.

On a year-on-year basis, the GDP grew 1.0 pct in the Eurozone and 1.5 pct in the EU-28. The Czech economy recorded the highest GDP growth rate in the first quarter (3.1 pct), followed by Cyprus and Romania (1.6 pct each), Poland (1.0 pct) and Bulgaria and Spain (0.9 pct each). On the other hand, Lithuania (-0.6 pct), Estonia (-0.3 pct), Greece (-0.2 pct) and Finland (-0.1 pct) recorded negative growth rates.

Meanwhile, despite the attempts to regulate Greece’s debt a significant revenue collapse was recorded in May, which preludes to the wild taxation that may be imposed during and after this summer.

The public revenue receipts shortage reached 1 billion euros, of which about 650 million come from unpaid taxes. A fact that partially contributed to this shortage was that the tax declarations for Greek citizens have not yet been submitted.

Furthermore, Greek authorities still don’t know whether the income tax will be paid by all individuals, even though Greek Alternate Finance Minister Nadia Valavani has made it clear that the payment period will not be extended.

The weak tax collection are worrying for the achievement of the primary surplus (of 0.6% of GDP) which is one of the main points addressed in Greece’s proposals to the country’s creditors.