Austerity pushes Greece deeper into recession

The Greek economy shrank by 1.5 per cent in the second quarter of the year, official statistics showed on Thursday. Coupled with the 0.8 per cent contraction it suffered in the first three months of the year, the fresh data suggests the country’s recession is deepening quickly.

Reuters

Greece agreed a 110-billion-euro rescue package with the European Union and the International Monetary Fund in May to cover its borrowing needs until 2012.

But the money  came with the condition that the government put through a tough austerity package.

On Thursday the national statistics office said the decline in the economy was accelerating following a spate of wage and pension cuts.

A “significant” fall in consumption had contributed to the latest contraction, with figures predicting that the total decline in GDP will be four per cent this year.

Unemployment rose to 12 per cent in May compared to 8.5 per cent a year earlier, according to the statistics office.

Elsewhere in Europe on Thursday it was confirmed that:

• Industrial production in the Eurozone dropped by 0.1 per cent in June;
• Spanish 12-month inflation rose to 1.9 per cent in July, its highest level in almost two years;
• Consumer prices in Ireland fell 0.1 per cent in July compared to 12 months earlier;
• Germany’s growth figures are expected to show continued improvement on Friday.