High tourism revenues helped Greece’s battered economy shrink less than initially estimated in April-June, making a projected exit from a six-year recession in 2014 more likely.
The country’s statistical authority said Friday that the second quarter contraction was 3.8 percent of gross domestic product year-on-year — considerably better than last month’s flash estimate of 4.8 percent, and the lowest in three years.
This provides a morale boost to the conservative-led government, which faces mass anti-austerity protests over the weekend as well as a grueling inspection by its international creditors later this month.
Greece has received more than 200 billion euros ($260 billion) in rescue loans over the past three years, in exchange for harsh income and welfare cuts that hurt the economy and pushed unemployment to record highs. But it is still unclear whether the country will be able to pay down its debt after the bulk of the loans run out next summer, and potential new aid would probably come on condition of further austerity.
Analyst Vangelis Agapitos warned that it is still too early to say whether the projected return to growth next year can be achieved, as the government elected in June 2012 is showing signs of reform fatigue.
“The government must continue on the course it has followed over the past 14 months,” Agapitos said. “The economy has to be fully turned round from a model based on domestic consumption and a big public sector to a more outward-looking and internationally competitive model.”
The statistical authority said Friday’s GDP revision was based on data not available when the preliminary estimate was issued. These included a 5.3 percent turnover increase in accommodation and food services in April-June — compared to a 21 percent fall a year earlier — and a strong improvement in the external trade deficit, largely attributed to lower demand for imported goods because of the recession.
The revised GDP figures were chiefly helped by a boom in the key tourism industry, which accounts for more than 15 percent of the Greek economy and sustains about one in five jobs.
“The remarkable rise in tourism definitely had an extremely positive effect on the economy,” Agapitos said.
Tourism officials expect a record 17 million arrivals this year — up from 16 million in 2012.
Greece’s conservative government has promised to balance its annual budget this year, continuing austerity measures including plans to launch a program for mass public sector firings this year.
Unions are planning anti-austerity demonstrations over the weekend in Greece’s second largest city, Thessaloniki, where conservative Prime Minister Antonis Samaras will open an international trade fair and make an annual address on the state of the nation’s economy.
More than 4,000 police officers are on duty for the demonstrations. But on Friday, police officers staged their own uniformed demonstration in the northern Greek city against government pay cuts.
“Our struggle is to ensure public safety, but also our own survival,” Christos Fotopoulos, head of the Greek Police Officers’ Association, said. “What they have done to us is degrading and it must stop.”
Costas Kantouris reported from Thessaloniki.
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