Greek Economy Pays for Drawn-Out Talks With Return to Recessionby
GDP contracted 0.1% in 1Q after 1.2% contraction in 4Q
Government cuts 2017 growth forecast to 1.8% from 2.7%
Greece’s economy returned to recession in the first quarter as delays in concluding talks between the government and its creditors raised the specter of another debt drama.
Gross domestic product contracted 0.1 percent in the first three months of the year after shrinking 1.2 percent in the previous quarter, the Hellenic Statistical Authority said in a statement on Monday. The seasonally adjusted contraction was 0.5 percent from a year earlier.
Talks between creditors on easing the country’s debt load are accelerating after Greece and officials from the International Monetary Fund and euro-area institutions ended a months-long impasse over the austerity measures the government needs to take. While that’s prompted a rally in Greek stocks and bonds this month, the delay has taken a toll on the economy.
That cost led the government to cut its GDP growth forecast for this year to 1.8 percent from 2.7 percent on Saturday. The European Commission reduced its estimate to 2.1 percent last week.