Greece's economy shrank in the second quarter at its slowest annual pace since late 2008 when its protracted recession began, data showed today.

The figures support expectations that Athens will emerge from the six-year slump this year. 

New data released by the finance ministry also showed Athens was well ahead of target for a primary budget surplus - which excludes debt servicing costs - this year. 

Gross domestic product, based on seasonally unadjusted data, shrank 0.2% year on year, with the pace of contraction slowing for the fifth quarter in a row. 

That topped expectations among economists polled by Reuters, who predicted the €183 billion economy would contract by 0.4% in the second quarter. 

Greece and its international lenders project the economy to pull out of recession this year and expand by 0.6%, helped by investments, exports and tourism. 

Athens has enjoyed a boost in fortunes in recent months, buoyed by two successful bond sales after a four year exile from markets and improved market sentiment since nearly crashing out of the euro in 2012. 

The pace of contraction weakened sharply last year with the decline in output slowing from 6% in the first quarter to 2.3% in the last quarter, resulting in an annual contraction of 3.9% for 2013 as a whole.

Hit by austerity policies imposed by European Union/International Monetary Fund lenders who bailed out Greece, the economy has shrunk by almost a quarter over six years, suffering its most protracted recession since World War II. 

A key driver of the decline has been a 26% slump in household consumption as record unemployment and wage cuts slashed disposable incomes, coupled by a sharp fall in investment. 

On the fiscal front, the finance ministry said the central government budget had a €2.3 billion primary surplus in the first seven months of the year, topping a target of €800m. 

The central government surplus excludes the budgets of social security organisations and local administrations and is different from the figure monitored by EU/IMF lenders, but gives an indication of the country's progress in bringing its finances back on track.