Greek economy slips back into recession

[ATHENS] Greece's economy contracted by 0.2 per cent in the first quarter of this year, preliminary data from the national statistics agency ELSTAT showed Wednesday, pushing the country back into recession.

The second consecutive quarterly fall in national output, following growth for most of 2014, coincided with a return to political uncertainty in the country and doubt over its 240-billion-euro (US$270 billion) international bailout.

Greece's economy contracted by 0.4 per cent in the final quarter of last year.

Four months of deadlock between Greece's new radical Syriza-led government and its EU-IMF creditors over the reforms needed to release a final 7.2 billion euros in bailout funds has led to concerns Athens is running critically short of cash and may soon end up defaulting, setting off a messy exit from the euro.

That has led the EU to drop its forecast for Greek growth this year to 0.5 per cent from the 2.5 per cent it had been forecasting as recently as February.

The EU's economic affairs commissioner, Pierre Moscovici, has noted there was a high degree of uncertainty with the forecast as it assumes Greece will reach a deal with its creditors.

The new government, according to working documents, sees the economy expanding between 0.1 and 0.8 per cent this year.

Greece lost a quarter of its economic output in the six years of recession it suffered from 2008 as the country struggled with a debt crisis.

AFP