Business

Greek economy in surprise return to growth

Fishing boat

The Greek economy grew by 0.8% in the second quarter of the year, confounding expectations of a steep contraction.

The official figures, based on a flash estimate, also revised a reading of 0.2% negative growth in the first quarter to a flat reading, showing no change in economic activity.

The reading did not break down which sectors had been most active.

The figures from the country's Elstat agency come as the Greek parliament prepares to vote on new bailout plans.

The Greek government has defended the controversial new programme as tough, but essential if the country is to avoid financial collapse.

The credit crisis sparked six years of recession in Greece, from which it emerged in 2014 before shrinking again.

Until these latest figures were released, the economy had been forecast to shrink again this year by between 2.1% and 2.3%.

Nikos Magginas at National Bank said it was now possible that the contraction would be less than 2%.

He said there were a number of sectors likely to have helped boost activity: "Some economic activity indicators in the second quarter, including consumption, industrial production and tourism, had shown particular resilience."

Improvement

Greece must repay some €3.4bn (£2.4bn; $3.8bn) to the ECB by next Thursday. If the deal is not finalised by then, Athens may need more emergency funding.

Eurozone finance ministers are expected to meet at the weekend to endorse the draft deal.

Its Prime Minister, Alexis Tsipras, said the deal would end the country's economic uncertainty.

The chances of the eurozone vote succeeding improved on Thursday afternoon, when Finland, which originally indicated it favoured a temporary Greek exit from the euro, backed the plan.

Finland's finance minister, Alexander Stubb, said: "We have come a long way during the summer. The future of the euro was at stake.... but now we've got a solution and will live with it."

On Wednesday, former Greek finance minister Yanis Varoufakis said the bailout deal was "not going to work", because it was based on an unsustainable debt burden that the economy would be unable to produce enough to repay.

Mr Varoufakis was removed from the talks early last month and replaced by the present finance minister, Euclid Tsakolotos.

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