Greek Economy Unexpectedly Contracts as Next Crisis Brews


Greek Economy Unexpectedly Contracts as Next Crisis Brews

Greece’s economy unexpectedly contracted in the fourth quarter, putting a dampener on its growth throughout the year and adding to Prime Minister Alexis Tsipras’s woes as he tries to find a way to unlock bailout funds.

Gross domestic product fell 0.4 percent in the final three months of 2016 after growing a revised 0.9 percent in the previous quarter, the Hellenic Statistical Authority said in an e-mailed statement on Tuesday. The median estimate in a Bloomberg survey was for a 0.4 percent expansion. The economy grew 0.3 percent over the whole year, according to Bloomberg calculations.

Greece is locked in a dispute of with creditors as Tsipras’s government balks at legislating further budget cuts that would kick in if it misses ambitious fiscal surplus targets for 2018 and beyond. The country risks another recession and even greater austerity measures if it doesn’t immediately strike a deal for the release of bailout funds, Bank of Greece Governor Yannis Stournaras said on Monday.

The European Commission on Monday said it expects the Greek economy to expand 2.7 percent this year and 3.1 percent in 2018. Uncertainty over completion of the current bailout review poses a downside risk to those forecasts, the Commission said. A 0.3 percent growth rate for 2016 is in line with the Commission’s report, and compares with its prior forecast for 0.3 percent contraction.

Tuesday’s data showed a fourth-quarter annual expansion of 0.3 percent, down from a revised 2.2 percent in the previous quarter. The quarterly expansion in the three months through September was adjusted to 0.9 percent from 0.8 percent.

Frequent and large revisions in the country’s GDP data complicates analyzes of the economy, the International Monetary Fund said in a report last week.

Source: Bloomberg

Source from : World Economy News