Athens: Greece's economy contracted in the second quarter more than originally estimated as the government cut back on spending and raised taxes as part of efforts to trim the European Union's second-biggest budget gap.
Gross domestic product shrank 1.8 per cent from the first quarter, when it fell 0.8 per cent, the Athens-based Hellenic Statistical Authority said in an e-mailed statement yesterday. From a year earlier, GDP declined 3.7 per cent.
The figures were revised from an initial August 12 reading of a quarterly contraction of 1.5 per cent and a 3.5 per cent drop from a year earlier.
Greece faces a second year of a recession as the government attempts to tame a budget shortfall of 13.6 per cent of GDP, the highest in the 27-nation EU after Ireland. Wage and pension cuts and tax increases have damped spending.
Prime Minister George Papandreou's government, which forecasts the economy will shrink 4 per cent this year, is enacting a three-year deficit-cutting plan in return for a 110-billion-euro (Dh463 billion) bailout from the EU and the International Monetary Fund. Government consumption fell 8.4 per cent from the first quarter of 2010 while private consumption dropped 4.2 per cent, leading to a 5.1 per cent decline in total consumption, according to today's report.
Tax increases on fuel, alcohol and tobacco have boosted the inflation rate to a 13-year high. The August rate held at 5.5 per cent, the same as July and the most since Greece adopted the euro in 2001, the statistics authority said yesterday.
Greece's unemployment rate climbed to 12 per cent in May, according to the latest data from the agency.
