Greece sees economy shrink yet again

Greece’s economy shrank at an annual 5.7 per cent in the last quarter of 2012, combining for a 20 per cent slump in real terms since 2008.

It would have been worse but for a 17.5 per cent drop in the country’s fourth quarter trade gap, the country’s statistics service ELSTAT said yesterday.

The revised gross domestic product data showed a slightly milder contraction than a 6 per cent estimate made in February, but Greece is still expected to contract for a sixth straight year this year.

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The government and the central bank both project a 4.5 per cent 2013 contraction.

“The preliminary data confirmed the continuing contraction of domestic demand, with lower imports providing a positive influence,” said Eurobank economist Platon Monokroussos.

Consumption, the main driver behind Greece’s gross domestic product, fell 9 per cent year-on-year, continuing to weigh on output. Gross capital investment fell 10.3 per cent in the fourth quarter, its rate of decline slowing compared to previous quarters.

The latest figures bring the full-year 2012 contraction to 6.4 per cent, broadly in line with government projections.

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n Cyprus is inching towards raising corporate tax to stave off IMF pressure for investors to take losses on bank deposits as it seeks to secure a bailout needed to avert a sovereign default, a source said.

International lenders are urging Cyprus to lift its corporate tax rate from 10 per cent, and introduce a capital gains levy, to ensure it can repay an international bailout it requested last year.

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