Greece: Economic activity continues to contract
August 12, 2011
In the second quarter, GDP contracted 6.9% over the same period last year, according to the flash estimate released by the Hellenic Statistical Authority (EL.STAT) on 12 August. The result came in above the 8.1% decline recorded in the previous quarter but still represented the fifth straight contraction. The statistical office reported that the decrease in domestic demand caused the decline of GDP, partially offset by improving net exports. The government continues to struggle to meet the budget targets set under the two rescue packages. In September, the government will begin to comply with its creditors' conditions by implementing a VAT rate increase and a lower threshold for taxpayers, as well as some other austerity measures. The fiscal tightening will further dampen consumer and business spending in the quarters ahead. Tourism represented the only positive note, with tourist arrivals increasing 10.0% in the first seven months of the year, according to the Association of Greek Tourism Enterprises. EL.STAT did not provide seasonally-adjusted figures this time due to methodological problems. The statistics agency is due to release revised provisional data on 8 September.