Greek economy shrinks by 2.5 percent in first quarter

08:17, June 10, 2010      

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The Greek economy shrank by an annual rate of 2.5 percent in the first quarter of this year, the country's National Statistics Agency announced on Wednesday.

The decrease is higher than the earlier estimate of 2.3 percent which was released a month ago by the same agency. Greece, which has been hit hard by the global economic crisis since late 2009, has sunk deep into recession.

According to the latest forecasts of Greek and European Union experts, the Greek national economy will further shrink by around 4 percent this year, as the government cuts public expenses and wages and increases taxes to tackle a severe debt crisis.

Greece has a budget deficit of 13.6 percent of GDP which must be reduced to less than three percent over three years through harsh austerity measures and reforms, according to a Stability and Growth Program introduced this year.

The Greek government secured in May the financial aid of other European partners and the International Monetary Fund (IMF) reaching up to 110 billion euros (132 billion U.S. dollars), but still the figures are bleak.

According to the data released on Wednesday by the Greek Statistics Agency, state consumption declined by nine percent, building activity by 20.2 percent in the first three months of 2010 in comparison to the first quarter of 2009. Industrial production reduced by 5.1 percent in April.

Also imports of products and services dropped by 6.6 percent and exports of goods and services by 0.5 percent in the first quarter this year compared to same period of 2009 .

Besides the figures, Greek citizens already feel the increased burden on their shoulders due to the crisis and the austerity measures this year.

As the agency announced the latest data on the national economy, hundreds of pensioners staged a rally in front of the Health Ministry on Wednesday noon, protesting that the government measures strangle their households.

Low income pensioners denounced cutbacks on their pensions and hikes in taxes and medicines that "kill the social security system, " as they had written on banners. According to estimates the average Greek pensioner loses two month pensions on an annual basis due to the cutbacks on income and increases of the living cost.

Pensioners chanted slogans such as "IMF get out, we are not paying your crisis" and promised to be back on the streets soon. They will take part in the forthcoming general strike Greek labor unions have called later this month, on the day the parliament will vote on the reform of the pension and social security system.



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