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The recesion deepens in Greece

12 August 2011 / 18:08:52  GRReporter
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The Greek GDP registered a 6.9 per cent drop in the second quarter of 2011 compared with same period last year. According to the Greek statistics, this decrease is mainly due to the reduced consumer demand, but the improved trade balance partially counterbalanced it.

The Greek opposition responded to the declared value and said the scale of the recession is unprecedented. "This exceeds the most pessimistic predictions. These figures show how utopian are the expectations of the Ministry of Finance for a recession of 3.5 per cent for 2011," said the New Democracy’s person responsible for the financial matters Christos Staikouras.

While he was criticizing the government that "it is taking the Greek economy to an endless desert," his colleague Notis Mitarakis opposed the privatization of state enterprises in the present situation of the stock markets. The person in charge of the economic matters of the right wing supported the position of the Chairman of the Privatization Fund Yannis Koukiadis and said, "the sale in terms of depreciation of stock prices will not recover the state property, it will not solve the debt problem and will not take Greece out from the crisis."

However, the Swedish Prime Minister Fredrik Reinfeldt accused the euro zone countries that "they do not do what they know they should do" to solve the debt crisis. He did not name any particular country, but stressed that the responsibility for solving the crisis is the responsibility of both weak and strong economies. "When you talk a lot and do nothing, it is of concern," he said.

The Swedish Prime Minister referred to the countries of southern Europe, accusing them that they "did nothing for the real reforms that never took place. They are not to blame anyone but themselves. We had made numerous recommendations, reports and statements for reforms that any state needed to implement."

Fredrik Reinfeldt pointed out two examples, which he believes the euro zone countries should apply. The first is Sweden, which is not a member of the euro zone and has gone through a similar crisis in 1992. Then its budget deficit reached 10 per cent of the GDP and the foreign debt was 70 per cent. The scheme the country applied was the opposite of what the euro zone is doing now. The Swedes reduced government spending, thanks to the private sector incentives for development and left the troubled banks fail.

The second example of the Swedish Prime Minister is not at all attractive. He referred to the experience of the Baltic countries, which revived after a deep recession but today have the highest rates of unemployment in the European Union, together with Greece and Spain.

In Greece, however, structural changes are still slow and the country is breathless in anticipation of the decisions on reforms in the public sector but it is not yet clear when exactly they will be announced. At the same time, next Tuesday, when the world will be awaiting the outcome of the meeting between Angela Merkel and Nicolas Sarkozy in Paris, the Public Debt Management Agency in Greece is preparing to hold an auction of quarterly bills worth one billion euro. The bills are maturing on November 18 this year.

Today, the session of the Athens Stock Exchange closed at 991.14 points of the index and 54.05 million euro turnover. It is still under the strategic high of 1000 points, but recorded an increase of 1.53 per cent. On a weekly basis, however, a decrease of the index by 6.25 per cent was reported. The Greek spread-index of 10-year government bonds is still at the record high level of 1346.7 bps.

Tags: EconomyStock newsMarketsGDPRecessionReformsBills
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