Greece Economy Decline More than Expected in Q3
Dec 02, 2015 09:53 AM EST
ELSTAD, Greece Statistical agency on Friday announced the descending of Greek economy to 0.9% in the third quarter.
Market Watch reported that Greece's economy shrunk by a revised 0.9% in the third quarter. The contraction is marginally deeper than earlier ELSTAD estimation of a 0.5% contraction. Based on the ELSTAD's revised data, gross domestic product declined by 0.9% from July to September, compared to the second quarter.
Following the political unrest that resulted in a snap general election on September, the re-elected Prime Minister Alexis Tsipras tried to rejuvenate Greece's economy. In order to bring the country out of its continuing economic crisis, Prime Minister Tsipras had to agree upon the bailout term in taking austerity measure.
Previously in July, Greece government under Alexis Tsipras leadership agreed to a bailout deal. However, a political rebellion from Tsipras' own party created a disruption in implementation of the third bailout package. As a result Prime Minister Tsipras announced his resignation in August and declared an election in September.
In the September election, the left wing party, Syriza won the election and the new government was formed with Alexis Tsipras as re-elected prime minister. A new government then launched the delayed austerity package in November. However, previous delay has cost so much to Greece economy as the ELSTAD data shows.
According to Strait Times the higher contraction on Greece economy is a result of capital controls to shore up banks took a toll on investment, exports and consumer spending. Nikos Magginas, the economist at National Bank said that, "The new reading showed that investment outlays were significantly squeezed by uncertainty while capital controls led to a fall in exports,"
Statistics showed gross capital investment fell 7.0% and exports down 7.1%, but resilience in consumer spending with only 1.0% and 16.9% drop in imports was helpful to reduce the impact of recession. Government expects the economy to stay on the flatline this year with only 0.7% contraction in 2016. However, EU Commission, OECD and European Bank for Construction and Development predicted the economic contraction will be about 1.4% to 1.5% this year.
The Guardian reported that Eurozone on Monday has agreed to release next installment of bailout plan to Greece. The bailout plan worth of €2 billion ($2.1 billion) will be released through European Stability Mechanism (ESM) as Eurozone bailout fund. The managing director of ESM, Klaus Regling is certain of Greek recovery, "If program implementation remains strong, I am confident that the Greek people's reform efforts will allow them to make visible strides toward a sound recovery," he said.
The next phase of bailout plan will be important to ensure Greece's economic recovery, as long as the country's political condition remain stable.