Greek recession gets worse but central bank calls for more cuts

Tim Wallace
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GREECE’S recession will be even worse than thought just a few months ago, the country’s central bank warned yesterday, slashing the troubled country’s GDP forecast yet again.

The economy is now set to contract by five per cent this year, following 2011’s 6.9 per cent recession and worse than previous expectations of a 4.5 per cent fall this year.

Central bank governor George Provopoulos said sustained austerity and economic reform is the best way to return to sustainable economic growth.

The options for the country are either “an orderly, albeit painstaking, effort to reconstruct the economy within the euro area, with the support of our partners; or a disorderly economic and social regression, taking the country several decades back, and eventually driving it out of the euro area and the European Union,” he warned.

Despite the current recession, if the government fails to maintain momentum in reforms the situation would deteriorate further, “which will impact negatively on citizens’ morale.”