Greece economy shrinks 1.8% as consumers cut spending

Greek protesters Greece has faced months of strikes and protests about the state of its economy

Related Stories

The debt-laden Greek economy shrank 1.8% in the second quarter as households slashed spending.

The contraction was worse than expected and compares with the 0.8% shrinkage in the January-to-March period.

Greece's national statistics office said that private consumption dropped 4.2% year-on-year, against a rise of 1.5% in the previous quarter.

The figures underline Greece's struggle against recession and cast a shadow over European stock markets.

The statistics agency said that gross capital investment tumbled by 18.6% in the second quarter, while exports fell 5%.

Greece is in the grip of a deep economic crisis.

The country has imposed radical austerity measures to balance the books and has been granted 110bn euros ($140bn; £90bn) in emergency aid from the European Union (EU) and International Monetary Fund (IMF).

Debt worries

Platon Monokroussos, economist at EFG Eurobank, said that there would be no let-up for the economy in the short term.

"Economic growth is likely to remain firmly in negative territory in the second half, given tight domestic credit conditions and the government's austerity programme," he said.

Greece's weak economic performance could also led to an increase in the country's cost of borrowing, analysts said.

"The worse-than-expected second-quarter figures are also likely to drive a new increase in Greek government bond yields, which have been rising steadily in recent months," said Diego Iscaro at IHS Global Insight.

"Indeed, the spread between Greek and German 10-year government bonds currently stands above 900 basis points, just below their peak in May."

It was the prohibitively high cost of borrowing that led to the rescue package from the EU and the IMF.

Worries about sovereign debt hit stock markets at the start of trading on Wednesday, with all the leading bourses down and bank shares hardest hit.

Greece was not the only concern, with Hungary's economy barely moved in the second quarter.

The country's gross domestic product in the April-June period was 0.8% up, but below the European Union average growth of 1% for the second quarter.

More on This Story

Related Stories

More Business stories



  • The Duchess and Duke of Cambridge and Prince GeorgeGorgeous George

    Baby steals show as tour reveals rise in support for monarchy

  • Houses of ParliamentBig impact?

    How a Scottish Yes vote would change the UK Parliament

  • Kim Jong-un visits a children's campThe Notepad Men

    Who are the people who take down Kim Jong-un's every word?

  • Donald Tusk7 days quiz

    What made Poland's prime minister become an internet hit?

  • Beebcoins logoMaking money

    How easy is to coin your own virtual currency?

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.