Greece’s economy may shrink 4.2 percent this year instead of 4.4 percent, an almost negligible difference if it’s correct, the European Commission has re-estimated, but could return to a 0.6 percent growth next year. Most every previous estimate has been wrong.
Still, the EU said it expects Greece’s Gross Domestic Product (GDP) in the Eurozone will fall 0.4 percent this year, compared with a February prediction of a 0.3 percent. This follows a 0.6 percent contraction in 2012 and shows the region is heading for its first ever back-to-back years of falling output.
Cyprus in particular is destined for a far worse-than-anticipated recession, expected to shrink 8.7 percent in the aftermath of a burgeoning economic crisis with harsh austerity measures taken in return for a 10 billion euros ($17 billion) bailout from the same international lenders whose tough measures for Greece created a deep recession there. That estimate is more than double the previous projection of a 3.5 percent shrinkage.
Greece’s record 27.2 percent unemployment rate is also expected to continue and may get worse. “High unemployment points to the need for continuing the course in structural reforms,” said Marco Buti, head of the Commission’s economics department. “The reduction in fiscal deficits is making headway in a differentiated way.” At the same time, “intolerably high unemployment in vulnerable member states gives cause for a great concern,” Buti said.
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