Greece's economy slumped more than expected last year and will stay in recession for a third year in a row in 2011 with economists seeing little hope for a strong recovery even after that.
The €230 billion economy shrank at an annual 6.6% pace in the last quarter of 2010, as the austerity-induced recession deepened from a revised 5.7% decline in the previous quarter, data showed today.
Flash Eurostat estimates showed the downturn in economic activity for the whole of 2010 was 4.52%, worse than the government's forecast decline of 4.2%, as it struggled to cut deficits and tackle debt.
Athens has been forced to impose stringent austerity measures as a condition of the €110 billion bail-out it agreed with the European Union and International Monetary Fund last May to try to solve its debt crisis.
The government projects GDP will decline 3% this year but sees light at the end of the tunnel, saying the first signs of growth will appear towards the end of the year.
The central bank forecast in a monetary policy report today that GDP may shrink by 3% or more in 2011.
The government has said structural reforms to boost competitiveness and progress in slashing deficits will set the stage for stabilisation and a return to a sustainable, export-led growth path in 2012.
While some encouraging pick-up in Greek exports has materialised, it has more to do with recovering demand in the global economy and less with competitiveness gains so far, according to the country's central bank.
Returning to growth is crucial for overborrowed Greece, especially after late 2012, when bail-out funding runs dry. Its government will need to boost revenues to service a debt ratio projected to reach 157% of GDP in 2013.
Quarter-on-quarter, Greece's economy, which makes up about 2.5% of the euro zone, shrank 1.4% in the fourth quarter. Economists had forecast a contraction rate of 1.2%.
