Greece Back in Recession as Bailout Impasse Drains Economy

Greece’s economy fell back into recession in the first quarter, raising pressure on the government to reach an agreement with creditors over the next bailout payment.

Gross domestic product contracted 0.2 percent in the three months through March after shrinking 0.4 percent in the previous period, the European Union’s statistics office in Luxembourg said Wednesday. The median estimate in a Bloomberg survey was for a 0.5 percent drop.

“Greek GDP numbers are not disastrous, but the more timely indicators deteriorated much more rapidly since March,” said Michael Michaelides, a fixed-income strategist at Royal Bank of Scotland Group Plc in London. “So we would expect the full costs of the impasse to be reflected in the second-quarter numbers.”

The contracting economy increases the measures Prime Minister Alexis Tsipras needs to take to meet conditions set by euro-region governments and the International Monetary Fund. Greece’s government will have to raise at least 3 billion euros ($3.4 billion) to meet the minimum budget targets acceptable by creditors, an official with knowledge of the discussions said.

Greece has enough cash to make it through “a couple of weeks,” Finance Minister Yanis Varoufakis said after a meeting of euro-area finance ministers this week. The nation paid back about 750 million euros to the IMF by drawing on a holding account at the fund, a Greek official said. The government has also raided municipal coffers to pay salaries and pensions.

(Πηγή: bloomberg.com)