Greek Recession Eases In Q2

The rate at which the Greek economy is shrinking eased in the second quarter of 2013, according to data released by its statistical office. In Q1, the Greek economy contracted by 5.6%, but the rate of decline eased a bit in Q2 to 4.6% which at least is a move in the right direction. Genuinely good news was provided by the fact that Greece has posted a budget surplus of €2.6 billion in the year to July; beating projections of a shortfall of €3.1 billion – the figure includes EU subsidies. The surplus was explained by savings made on investment projects, more money being provided from EU subsidies and one-off payments from the Central Bank to the government from profits made on government bonds. It is anticipated that the Greek deficit for the full year will come in at 4.2%.

The Greek economy has been in recession since the onset of the Global Financial Crisis and has endured a 25% reduction in output since 2007. Unemployment is the worst in the Eurozone with 26.9% of the workforce idle.

A major problem for Greek authorities is the proper collection of taxes due to the exchequer. The magnitude of the problem was highlighted by a recent series of spot checks by the Greek authorities, largely prompted by tip-offs and complaints. In a series of checks carried out between 25th July and 5 August this year, almost half of 1465 businesses scrutinised (731) were found to be guilty of some tax infraction. In the islands of Skyros and Evia, a staggering 85% of businesses failed to comply with tax rules whereas the popular tourist islands of Mykanos, Santorini and Crete 56% of firms were failing to pay all taxes due. Understandably, Greece has faced calls from the IMF and its Eurozone partners to take stronger steps to deal with tax evasion.