Greek GDP Shrank in 1st Quarter as Recession Hits Cyprus
Greece’s economy contracted for a 19th quarter and Cyprus entered the third year of a recession amid a debt crisis that has seen the countries’ governments impose austerity measures to trim deficits.
Gross domestic product declined 5.3 percent in the three months through March from the same period last year after dropping 5.7 percent in the previous quarter, the Athens-based Hellenic Statistical Authority said in an e-mailed statement today. Greece doesn’t publish seasonally adjusted GDP data or quarter-on-quarter results.
“Given the circumstances, it’s quite hopeful,” said Tassos Anastasatos, an economist at Eurobank Ergasias SA (EUROB) in Athens. “If you see the first quarters of previous years, they were often the worst quarters of the year, and given that the measures applied were quite front-loaded, I would suspect that the readings for the next quarters will be better.”
Greece’s economic slump, which has now entered a sixth year, has been exacerbated by austerity measures imposed by creditors to reduce its budget deficit. The unemployment rate in February stood at 27 percent, with more than six in 10 young people out of work, while consumer prices dropped in March and April.
While the country has relied on 240 billion euros ($310 billion) in loan pledges from the euro area and International Monetary Fund since 2010, falling yields have fed the government’s ambition to return to bond markets next year.
Greek 10-year bond yields dropped below 9 percent today for the first time since October 2010, after Fitch Ratings late yesterday raised its rating for Greece one level to B-, citing “clear progress” on rebalancing the economy.
“The conditions for a recovery are gradually and slowly being built, but we need to see some prospects of the recovery not only coming but creating some real benefits for everyone,” Anastasatos said.
In Cyprus, where euro-area finance ministers in March decided to impose losses on bank depositors in exchange for a 10 billion-euro bailout, GDP dropped 1.3 percent from the fourth quarter on a seasonally adjusted basis, compared with a 1.2 percent drop in the previous period. The drop from the same period a year earlier was 4.1 percent.
The contraction was the seventh quarterly drop in Cypriot GDP, and the biggest of its recession so far.
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