Greek Economy to Shrink Further in 2012, Research Group Reports

Greece’s economy will contract further this year as austerity measures curb domestic demand, the Athens-based Foundation for Economic and Industrial Research said.

The economy will shrink by about 5 percent after contracting 6.8 percent in 2011, the foundation, also known as IOBE, said today in its latest quarterly report on the Greek economy.

Exports also may decline as growth and demand worldwide falter and unemployment may reach around 20 percent after rising in December to a record 21 percent and 51 percent among younger people, the IOBE said in the e-mailed report.

Greece is now in its fifth year of recession. Austerity measures adopted as part of a deal to obtain international financial aid include property taxes paid through electricity bills, an additional 12 percent cut in pensions and salaries for state workers this year and a 22 percent reduction in the minimum wage to 638 euros ($850) a month.

To contact the reporter on this story: Paul Tugwell in Athens at ptugwell1@bloomberg.net

To contact the editor responsible for this story: Jerrold Colten at jcolten@bloomberg.net

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