Greek Economy - IOBE Revises Estimate for 2013 Recession To 5.0%

The Greek economy is expected to shrink by 4.8-5.0% in 2013, slightly higher from initial estimates for 2013, the Institute for Economic and Industrial Research (IOBE) announced on Tuesday. In its quarterly report, IOBE said that its estimate was slightly worse compared with recent estimates made by the European Union and the IMF (-4.2%) and the OECD (-4.8%).

The report noted that a deep recession in the next quarters of the year will further raise the unemployment rate, although at a slower rate compared with the first quarter of 2013. Unemployment is expected to show signs of improvement during the summer months, helped by increased seasonal employment in the tourism sector.

On the other hand, employment is expected to suffer later in the year with workers' dismissals in the public sector as envisaged in a medium-term framework of fiscal strategy 2013-2016. Unemployment is projected to rise to 27.8 pct of the workforce this year, higher than earlier estimates made by IOBE.

Very low levels of demand will further pressure prices, although higher tourist arrivals are expected to slow a fall in prices during the summer months. A freeze in electricity rates will also help to bring the inflation rate to -0.4 pct this year.

IOBE noted that it necessary for the government to undertake specific actions and initiatives aimed at restarting investment activity in the country.