News Column

Greece Recession Will Deepen, Warns Finance Minister

Sept. 18, 2012
Greek emblem

Greece will suffer a much deeper than expected recession in the next few years, the country's finance minister said on Tuesday as negotiations with international creditors continued on a new package of austerity measures.

"The recession is great. We are in the fifth year and cumulatively so far, recession was of the order of 20 per cent and it is expected to reach 25 per cent by 2014," Yannis Stournaras told a business conference.

He said the deficit was squeezed by recession and would amount to 1.5 per cent of gross domestic product, compared with a previous forecast of 1.0 per cent.

The Greek government is hoping to finalise negotiations with its international lenders, the European Commission, the European Central Bank and the International Monetary Fund (IMF), collectively known as the troika within the next 10 days on some 11.5-billion-euros (15-billion-dollars) of cuts.

Greece's coalition leaders are scheduled to meet either on Wednesday or Thursday to finalise the cuts before Prime Minister Antonis Samaras travels to Rome on Friday to meet Italian Prime Minister Mario Monti.

The troika wants Greece to introduce radical reforms to the country's labour market, such as extending the working week to six days, further cutting pensions and public sector salaries, and increasing the retirement age by two years, to 67.

The demands also include the scrapping of the eight-hour working day and allowing employers to ask staff to work up to 78 hours a week. The troika is also pushing for the layoffs of an estimated 15,000 public sector workers.

In a new poll published on Tuesday by Public Issue on behalf of private radio station Skai, some 68 per cent of Greeks said they are against the terms of the country's bailout.

The survey found 85 per cent of those polled to say that they expect to be affected by the fresh round of cuts.

Greece's largest public and private sector labour unions have called a nationwide strike for September 26.

A report from the troika is expected by the end of September or early October, and is essential to Greece receiving its next 31.5-billion-euro tranche in aid. Without it, Greece would be forced to default on its public debt.

Source: Copyright 2012 dpa Deutsche Presse-Agentur GmbH

Story Tools Facebook Linkedin Twitter RSS Feed Email Alerts & Newsletters