Greek economy shrinks 7% in fourth quarter

The Greek economy, in recession for a fifth year, shrank by 7.0 percent in the fourth quarter of 2011 compared with output a year earlier, official estimates showed on Tuesday. The data, coming just one day before a deadline laid down by the eurozone for Greece to meet a series of conditions for a second debt rescue, highlights the extent of distress in the economy. "Available non-seasonally-adjusted data indicate that, in the fourth quarter of 2011, gross domestic product (GDP) ... decreased by 7.0 percent in comparison with the fourth quarter of 2010," the Greek statistics office said in a statement. The Greek economy was initially expected to shrink by 5.5 percent in 2011 and by 2.8 percent this year according to budget forecasts. But calculations for 2011 have been revised to a contraction of around six percent owing to the impact of wage cuts and tax increases, part of an EU-IMF economic adjustment programme enacted in return for bailout loans. The statistics office on Tuesday said it had also revised its GDP estimates for the first and second quarters of 2011, based on updated general government accounts. The contraction in the first quarter was reduced to 8.0 percent from 8.3 previously, and scaled back from 7.4 percent to 7.3 percent in the second quarter. Despite the poor showing, Greece was able to raise 1.3 billion euros ($1.72 billion) in a sale of three-month treasury bills with the return for investors dipping to 4.61 percent, the debt management agency (PDMA) said. "Total bids reached 2.701 billion euros and the amount finally accepted was 1.3 billion," the debt management agency said as eurozone finance ministers prepared to examine a new Greek austerity pledge in return for a 130-billion-euro bailout package to avert default in March. The issue had an original target of 1.0 billion euros. Athens had offered a 4.64-percent interest rate to raise 1.625 billion euros in an equivalent sale on January 17.