Greece Enters Sixth Year of Recession

Greece Enters Sixth Year of Recession

Data released last week showed Greece entered its sixth straight year of recession, but there is now cautious optimism about the economy’s prospects although unemployment is still hitting record highs and consumers are squeezed by pay cuts and tax hikes.

On Tuesday, Greece’s battered debt ratings received a rare upgrade from Fitch which noted “clear progress” on eliminating deficits.

Relations with sceptical creditors have been repaired in recent months, permitting Greece to draw successive loan instalments from the eurozone in return for bringing reforms back on track.

Foreign hedge funds are helping Greek banks to recapitalise after a damaging state debt write-down last year.

And a long-delayed privatisation programme is finally getting off the ground, enabling Prime Minister Antonis Samaras to embark on a four-day journey to China this week in search of new investments.

In 2008, Greece signed with Chinese shipping giant Cosco a 35-year concession agreement to run two container terminals at Piraeus, the main Greek port.

Now, Greece is hoping to entice Chinese interest in the privatisation of Athens International Airport and the sale of railways and real estate.

Athens also hopes to pitch the state’s gas distributor to Russian investors and water companies to French firms.

In return for two EU-IMF bailouts worth 240 billion euros ($309 billion), Greece has pledged to raise 9.5 billion euros in asset sales by 2016.

But in addition to bringing money into state coffers, Greek officials say privatisation is needed to bring investment into companies to help spur growth and job creation.

Unemployment in the country has climbed to 27 percent, a level unseen in Greece’s modern history, with the rate at over 64 percent among the young.

Samaras said the austerity “is reaching a level of unbelievable social pain and dramatic problems in the area of social cohesion.”

Under the terms of its economic bailout, Athens must cut another 4,000 state-sector jobs this year and 11,000 in 2014.

On three occasions this year, Samaras’ government has enacted emergency decree to thwart strikes from sailors, transport workers and teachers.

The state statistics agency on Wednesday said Greece’s economy had contracted by 5.3 percent in the first quarter of 2013 in an annual comparison.

The equivalent contraction in the first quarter of 2012 had been 6.7 percent of output, the agency said.