EU sees a deep but inevitable adjustment for the Greek economy

The European Commission sees a "deep but inevitable adjustment" for the Greek economy, in its spring report on the EU member-states' economies for the period 2010-2011 published in Brussels and released on Thursday.

The EU's executive said it expected a deep economic recession in Greece this year with -4.0 pct contraction in 2010 followed by a 2.5 pct contraction in 2011 and returning to positive growth rates from 2012.

Presenting the report, EU Economic and Monetary Affairs Commissioner Olli Rehn said the report did not take into account a package of measures included in an agreement between the Greek government, the EU and the IMF. Rehn predicted, however, that economic recession would be around the same levels despite the new measures, while he predicted that inflation would exceed 3.0 pct this year, falling to 2 pct of the workforce in 2011, while unemployment would total 12 pct in 2010, surpassing 13 pct in 2013.

Economic activity in the country is set to lose further steam, due to a number of factors, in particular worsening business and consumer confidence, the developments in financial markets and the implementation of an appropriately restrictive fiscal policy.