Greece's economy shrinks in 4th quarter amid political shakeup

Published Sat, Feb 14, 2015 · 12:28 AM

[ATHENS] Greece's economy unexpectedly contracted for the first time in a year as a political standoff rekindled concern that the country will leave the euro area.

Gross domestic product contracted 0.2 per cent in the three months through December after growing in the previous three quarters, the Athens-based Hellenic Statistical Authority said in an e-mailed statement on Friday. The median estimate in a Bloomberg survey was for 0.4 per cent growth.

"There were some first signs of the transmission of uncertainty into the real economy," said Nicholas Magginas, an economist at National Bank of Greece SA in Athens. "Things got worse in January, but this was a first wave." Greece is struggling to emerge from its worst slump since World War II that has left one in four people without a job. Economic hardship provides the backdrop to Prime Minister Alexis Tsipras's push to wring concessions from his euro-area partners on the country's bailout.

His Syriza party was voted in on Jan 25 on a pledge to ease austerity and negotiate a writedown some of the country's debt after a December impasse on a new president forced early elections. While European leaders haven't yet found an agreement, Mr Tsipras said after a meeting with his peers on Thursday that he sees political will to find a solution for what happens after the current aid program expires this month.

The economy still expanded 0.8 per cent in 2014 after six years of contraction wiped out about a quarter of the nation's output. That's more than the 0.6 per cent target projected by the European Commission and the International Monetary Fund in the country's current bailout plan. Full-year growth was bolstered by an "extraordinarily strong" performance in the tourism sector in the second and third quarters, according to Magginas.


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