We have now come full circle. After roughly six years of bone crushing austerity and EU memorandums (meant to bring Greece’s economy to life), we find out that Greece is now back to negative growth.
Gross domestic product contracted 0.2 percent in the three months through March after shrinking 0.4 percent in the previous period, the European Union’s statistics office in Luxembourg said Wednesday. The median estimate in a Bloomberg survey was for a 0.5 percent drop.
Greece last year emerged from its worst slump since World War II, which wiped out about a quarter of economic output and left one in four people without a job. That backdrop drove Prime Minister Alexis Tsipras’s government to power in January elections on a pledge to push the country’s euro-area partners to ease the country’s bailout conditions.
Instead, liquidity has dried up as the euro area and International Monetary Fund have held firm that Greece must adhere to terms agreed by previous governments and withheld loans from the 240 billion-euro ($270 billion) bailout.
The economy expanded 0.8 percent in 2014 after six years of contraction wiped out about a quarter of the nation’s output. The European Commission last week cut its forecast for Greek GDP growth this year to 0.5 percent from a previous forecast of 2.5 percent.
Meanwhile Greek PM Alexis Tsipras will chair his second ministerial meeting in two days after learning the country’s economy is back in recession.
Alexis Tsipras has said his radical left-led government has done as much as it can to strike a deal to get more bailout loans, insisting the ball is now in the court of the creditors.
At stake is a 7.2 billion euro rescue loan installment, and failure to reach an agreement could lead Greece to default on its obligations within weeks — triggering a chain of events that could force the country to leave the euro.